Q4 2024 eGain Corp Earnings Call
Good day, and welcome to the E-Gain Fiscal 2024, Earth Quarter, and full-year financial result call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key, followed by zero.
Operator: Full-year financial results call. All participants will be in listen-only mode. Should you need assistance? Please signal a conference specialist by pressing the star key, followed by zero.
Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on the touch-tone phone. To withdraw your question, please press star, then two.
After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on the touchstone phone. To withdraw your question, please press star then two. Please note this event is being recorded.
Operator: Please note this event is being recorded.
Jim Byers: I would now like to turn the conference over to Jim Byers, M.K.R. Investor relations. Please go ahead.
I would now like to turn the conference over to Jim Byers, MKR and Vester Relations. Please go ahead.
Ashutosh Roy: Thank you, operator, and good afternoon, everyone. Welcome to eGain's fiscal 2024 fourth quarter and full-year financial results conference call. On the call today are eGain's Chief Executive Officer, Ashut Roy, and Chief Financial Officer, Eric Smit.
Speaker Change: Thank you, Operator and good afternoon everyone, welcome to E-Gain's fiscal 2024 fourth quarter in full year financial results conference call. On the call today, E-Gain's Chief Executive Officer, Ashut Roy and Chief Financial Officer, Eric Smit.
Jim Byers: 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, and tend, 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 or details on the company's reports filed with the Securities and Exchange Commission.
Speaker Change: Before we begin, I would like to remind everyone that during this conference call management we'll make certain forward-looking statements, which convey management's expectations, beliefs, plans, and objectives regarding future financial and operational performance.
Speaker Change: Board-looking statements are generally preceded by words such as belief, plan, and 10, expect, anticipate, or similar expressions. Forward-looking statements are protected by safe, harbour provisions contained in the private securities litigation reform act of 1995.
Speaker Change: This 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 e-games results or details on the company's reports filed with the Securities and Exchange Commission.
Jim Byers: eGain is making these statements as of today, September 5, 2024, and assumes no obligation to publicly update or revise any of the forward-looking information in this conference call.
Speaker Change: He gained his making these statements as of today, September 5th, 2024, and assumes no obligation to publicly update or revise any of the forward-looking information in this conference call.
Jim Byers: In addition to gap results, we will also discuss certain non-GAAP financial measures such as non-GAAP operating income. The tables included with the earnings press release include a reconciliation of historical non-GAAP financial measures to the most directly comparable GAAP financial measures. eGain's earnings press release can be found by clicking the Press Releases link on the Investor Relations page of eGain's website at eGain.com. And along with the earnings release, we will post an updated investor presentation to the Investor Relations page of eGain's website.
Speaker Change: In addition to gap results, we will also discuss certain non-gap financial measures, such as non-gap operating income, the tables included with the earnings press release, include a reconciliation of the historical non-gap financial measures to the most directly comparable gap financial measures.
Speaker Change: Begames earnings press release can be found by clicking the press releases link on the investor relations page of e-games website at egame.com.
Speaker Change: and along with the earnings release, we will post an updated investor presentation to the investor relations page of E Games website and lastly, a phone replay of this conference will be available for one week.
Jim Byers: And lastly, a phone replay of this conference will be available for one week.
Ashutosh Roy: And now, with that said, I'd like to turn the call over to eGain's CEO, Ashu Roy. Thank you, Jim. Hello, everyone. We finished our fiscal year with revenue and profitability ahead of our projections. Local revenue for the year was, excuse me, was 92.8 million dollars. And our non-GAAP net income was 12.3 million dollars, or 39 cents. But, as you can check, looking at the fourth quarter, specifically, we saw increased new local momentum in our AI knowledge offering. This included some big grants, for example, a travel management subsidiary of a financial mega brand in the US.
Speaker Change: And now with that said, I'd like to turn the call over to E-Games CEO Ashut Roy.
Ashut Roy: Thank you, Jim and hello, big one.
Ashut Roy: We finished our fiscal year with revenue and profitability ahead of our projections.
Speaker Change: What we're going to do for you was, excuse me, was 92.8 million dollars and our non-gap net income was 12.3 million dollars or 39 cents, what I'd like you to check.
Speaker Change: Looking at the quote quote, specifically, we saw increased new local momentum in our AI knowledge offering.
Speaker Change: This included some big drafts, for example, a travel management subsidiary of a financial mega brand in the US.
Ashutosh Roy: Our AI knowledge hub will replace their homegrown knowledge base. Next is a mobility division of a multinational conglomerate in Germany. here our AI knowledge hub will consolidate their knowledge across multiple silos, which include Salesforce and other internal knowledge spaces. The third logo I want to point out is a global consumer brand based out of London to support their new product introductions across 84 countries. They have selected eGain's AI knowledge hub, and the one I want to highlight is an industry leader for higher education savings in the US. Our AI knowledge hub will replace this client's legacy knowledge systems. Looking at our overall business and the market, we are seeing growing inbound interest in our knowledge AI offerings in fiscal 2024. Our new logo wins and other fees for AI knowledge were up 50% Euro here, and our pipeline activity remains strong in July and August.
Speaker Change: Our AI knowledge hub will replace their homegrown knowledge base.
Speaker Change: Next is a mobility division of a multi-national conglomerate in Germany.
Speaker Change: Here, our AI knowledge hub will consolidate their knowledge across multiple silos, which include Salesforce and other internal novel spaces.
Speaker Change: The third logo I want to point out is a global consumer plant, the South of London.
Speaker Change: To support the new product introductions across 84 countries, they have selected E-Games AI in our job.
Speaker Change: and the last one I'm going to highlight is an industry leader for higher education savings in the US.
Speaker Change: Our AI knowledge hub will replace this client's legacy knowledge systems.
Speaker Change: Looking about overall business and market, we are seeing growing in bound interests in our knowledge AI offerings.
Speaker Change: In fiscal 2024, our new logo wins and other speeds for a knowledge were up 50% year over year.
Ashutosh Roy: In fact, this summer has been the strongest in four years, very much since COVID. It gives you a good sense of the foundational role of knowledge in delivering value with AI in customer service specifically. Let me share our bait in and it served from a partner report that was recently published in June this year. I quote, by 2025, 100% of generative AI virtual customer assistance and virtual agent assistance projects that lack integration to modern knowledge management systems will fail to meet their customer experience and operational cost reduction goals. That's a very strong statement coming from that.
Speaker Change: and our pipeline activity remains strong in July and August. In fact, this summer has been in the strongest in four years, very much since COVID.
Speaker Change: Give you a good sense of the foundational role of knowledge in delivering value with AI in customer service, specifically. Let me share your weight in and it served from a gotten a report that was recently published in June this year.
Speaker Change: I quote by 2020 Foglose
Speaker Change: 100% of generative AI virtual customer assistant and virtual agent assistant projects.
Speaker Change: That lacks integration to modern knowledge management systems.
Operator: Full-year Financial Results Call All participants will be in listen-only mode. Should you need assistance? Please signal a conference specialist by pressing the star key, followed by zero.
Speaker Change: Will fail to meet their customer experience and operational cost reduction goals.
Ashutosh Roy: I'm sure many of you read our reports over the years; you have read many. I cannot recall when I've been doing this for many years, a prediction like this that has a 100% number on the predictor and a fine frame which is basically 12 months from now or a few months from now and running on an average 12 months. What that means, and we are seeing this, is that every CEO of a large business is urgently demanding that their teams apply generative AI technology, and the key application is to apply generative AI technology to reduce operating cost and do it upscale, so they move the needle.
Speaker Change: That's a very strong statement coming from back where I'm sure many of you read down the reports over the years, you have read many.
Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on the touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded.
Speaker Change: I cannot recall, and I've been doing this for many years, a prediction like this that has a 100% number around the predictor.
Jim Byers: I would now like to turn the conference over to Jim Byers, M.K.R. Investor Relations. Please go ahead.
Speaker Change: And a fine frame which is basically romance from now or a few months from now, and running on an average 12 months.
Jim Byers: Thank you, operator, and good afternoon, everyone. Welcome to eGain's fiscal 2024 fourth quarter and full-year financial results conference call.
Speaker Change: Well, that means that we are seeing this that every CEO of a large business is urgently demanding that their teams apply a generative AI technology and the teams application.
Jim Byers: On the call today are eGain's Chief Executive Officer, Ashut 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, and tend, expect, anticipate, or similar expressions. Forward-looking statements are protected by safe harbor provisions contained in the Private Security's litigation reform act of 1995.
Jim Byers: 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 or details on the company's reports filed with the Securities and Exchange Commission, eGain is making these statements as of today, September 5, 2024, and assumes no obligation to publicly update or revise any of the forward-looking information in this conference call. In addition to gap results, we will also discuss certain non-gap financial measures such as non-gap operating income.
Speaker Change: The Fly-Gender today I technology will be used.
Speaker Change: Operating class and do it on scale so they move the needle.
Ashutosh Roy: As we know, customer service is one of the significant operating line item costs in business. Given that Gen AI needs a solid knowledge foundation to deliver that value, as Gartner points out, not surprising that we are seeing more and more businesses looking to centralize and modernize the knowledge platform. So, as we've been saying for a few quarters, we are doubling down on this AI knowledge market opportunity. Currently, half of our revenue comes from AI knowledge offerings. Over the past year, we have increasingly rotated our R&D investments towards AI knowledge costs. As you may know, we launched Assist GPT, an eGain product, in February this year, a novel solution to automate and accelerate what are routine but time-taking tasks for customer service agents and knowledge authors.
Speaker Change: As we know, customer services are one of the significant operating line-out in costs and business.
Jenny: Given that Jenny, I need a solid knowledge foundation to deliver that value as Garth No point out. Now, surprising that we are seeing more and more businesses looking to centralize and modernize the knowledge platform.
Speaker Change: So, as we've been saying for a few quarters, we are doubling down on this AI knowledge market opportunity.
Speaker Change: Currently, half of our revenue comes from AI knowledge offerings.
Speaker Change: Over the past year, we have increasingly rotated our real investments to work in our knowledge products.
Speaker Change: As you may know, we launched the system GPT, an e-game product in February this year, a novel solution to automate and accelerate what are Ruby's but time-taking tasks for customer and the new system GPT.
Jim Byers: The tables included with the earnings press release include a reconciliation of historical non-gap financial measures to the most directly comparable gap financial measures. EGain's earnings press release can be found by clicking the press releases link on the Investor Relations page of eGain's website at eGain.com. And along with the earnings release, we will post an updated investor presentation to the Investor Relations page of eGain's website. And lastly, a phone replay of this conference will be available for one week.
Ashutosh Roy: This has been, and through the Aztec, we received in the market. Historically, knowledge, centralization and creation of scale has been what you would call a proverbial guardian knot, and we are helping clients slash through it with the eGain AI knowledge offerings.
Speaker Change: This has been in Tudoria, particularly as it seems in the market.
Speaker Change: Historically, knowledge, centralization and creation of scale has been
Speaker Change: What you would call it for warbill, guardian not.
Speaker Change: and we are helping clients flash through it with the beginning AI knowledge offerings.
Ashutosh Roy: Before I ask Eric, our key financial officer, to add more color to our financial operations, I want to mention that our annual customer event, Solve 24, will be held in Chicago on October 29th. At that event, we'll have many clients sharing success stories using our AI knowledge hub, and we'll also amount and demo new product capabilities. So, we're very excited about that, and now all we're ready.
Speaker Change: Before I ask Indic, I would like to mention that our annual customer event solves 24, will be held in Chicago on October 29th and 30th.
Ashutosh Roy: And now with that said, I'd like to turn the call over to eGain's CEO, Ashu Roy. Thank you, Jim. Hello, everyone.
Ashutosh Roy: We finished our fiscal year with revenue and profitability ahead of our projections. Local revenue for the year was, excuse me, was 92.8 million dollars. And our non-gap net income was 12.3 million dollars or 39 cents. But as you can check, looking at the fourth quarter, specifically, we saw increased new local momentum in our AI knowledge offering. This included some big grants, for example, a travel management subsidiary of a financial mega brand in the US.
Speaker Change: At the event we'll have many clients sharing success stories using our AI knowledge hub and we'll also announce in them our new product capabilities.
Speaker Change: So we're very excited about that and now we're all ready.
Eric Smit: Thanks, Ashut, and thanks everyone for joining us today. Let me provide more details about the financial results for the fourth quarter in full year of fiscal 2024, before discussing our outlook and guidance for fiscal 2025. Looking at our revenue, total revenue for the fourth quarter was 22.5 million ahead of our guidance, but down 9% year of year. The decline was primarily due to the impact of the large, too large client losses we had discussed on our Q2 call, and one of them from our conversation hub and the other from our analytics hub. For the fourth year, total revenue was 92.8 million, down 5% year of a year, and looking at our revenue by region for the full year, North America accounted for 78% of total revenue, the same as in the prior year.
Speaker Change: Thanks Ashutosh, and thanks everyone for joining us today. Let me provide more details about the financial results for the fourth quarter in full year of fiscal 2024. Before discussing our outlook and guidance for fiscal 2025.
Speaker Change: Looking at our revenue, total revenue for the fourth quarter was 22.5 million. It hit about guidance, but down 9% year over year.
Ashutosh Roy: Our AI knowledge hub will replace their homegrown knowledge base. Next is a mobility division of a multinational conglomerate in Germany, here our AI knowledge hub will consolidate their knowledge across multiple silos which include Salesforce and other internal knowledge spaces. The third logo I want to point out is a global consumer brand based out of London to support their new product introductions across 84 countries they have selected eGain's AI knowledge hub and the one I want to highlight is an industry leader for higher education savings in the US.
Speaker Change: The decline was primarily due to the impact of the large plant losses we had discussed on our Q2 call and one of them from our conversation hub and the other from our analytics hub.
Speaker Change: For the fourth year, Federal revenue was 92.8 million down 5% year over year. And looking at our revenue by region for the full year, North America accounted for 78% of the revenue the same as in the prior year.
Eric Smit: Looking at our non-GAAP gross profits and gross margins, gross profit for the fourth quarter was 15.9 million for a gross margin of 71%, compared to a gross margin of 74% year ago, and 71% last quarter. For fiscal 2024, gross profit was 66.4 million for a gross margin of 72%, compared to 74% for the prior year. Now, turning to our operations, non-GAAP operating costs for the fourth quarter came in at 13.7 million, down 8% from 14.9 million in the year-ago quarter, reflecting the expense controls we implemented earlier in the year. Non-GAAP operating costs for the fourth fiscal year were 56 million, down 13% year of year.
Speaker Change: Look at our non-gaped girls' profits and girls' margins.
Speaker Change: Gross profit for the fourth quarter was 15.9 million for a gross margin of 71%.
Speaker Change: from Pet to a gross margin of 74% years ago, and 71% lost quarter.
Ashutosh Roy: Our AI knowledge hub will replace this client's legacy knowledge systems. Looking at our overall business and the market, we are seeing growing inbound interest in our knowledge AI offerings in fiscal 2024, our new logo wins and other fees for AI knowledge were up 50% Euro here and our pipeline activity remains strong in July and August. In fact this summer has been the strongest in four years, very much since COVID. It gives you a good sense of the foundational role of knowledge in delivering value with AI in customer service specifically.
Speaker Change: For fiscal 2024, Gross Profit was 66.4 million for a gross margin of 72% compared to 74% of the prior year.
Speaker Change: Now turning to our operations, non-gap operating costs for the fourth quarter came in at 13.7 million down 8% from 14.9 million in the year ago quarter, reflecting the extensive controls we implemented earlier in the year.
Speaker Change: NonGap operating costs for the fourth fiscal year were 56 million down 13% year of year.
Eric Smit: As we see increased momentum from our AR and knowledge offering, we plan to increase investments, particularly in R&D and brand marketing, to capitalize on this very exciting opportunity. Looking at our bottom line, for Q4, non-GAAP net income was 2.5 million for 8 cents per share, compared to 3.6 million for 11 cents per share in the year-ago quarter. Adjusted EBITDA margin for the quarter was 11%, compared to 16% in the year-ago quarter. For the fourth fiscal year, non-GAAP net income was 12.3 million, or 14 cents per share on a basic and 39 cents per share on a diluted basis, up 47 cents on a dollar basis from non-GAAP net income of 8.4 million, or 26 cents per share on a basic and 25 cents per share on a diluted basis in the prior fiscal year.
Speaker Change: As we see increase momentum from our AI and knowledge offering, we plan to increase investments particularly in R&D and brand marketing to capitalize on this very exciting opportunity.
Ashutosh Roy: Let me share our bait in and it served from a partner report that was recently published in June this year. I quote, by 2025, 100% of generative AI virtual customer assistance and virtual agent assistance projects that lack integration to modern knowledge management systems will fail to meet their customer experience and operational cost reduction goals. That's a very strong statement coming from that. I'm sure many of you read our reports over the years, you have read many.
Speaker Change: Looking at our bottom line, 44, non-deaf net income was 2.5 million, for 8 cents per share compared to 3.6 million or 11 cents per share in the year ago quota.
Speaker Change: The Justice Ibidar margin for the quarter was 11% compared to 16% in the Erdogan quarter.
Speaker Change: was a 4th school year, 9 gap in 18th and was 12.3 million, or 40 cents per share on a basic and 39 cents per share on a diluted basis, up 47 percent on a dollar basis from non-gap in 18th and 0.4 million.
Speaker Change: or 26th of ship since Prishare on a basic and 25th since Prishare on a values of basis in the prior fiscal year.
Ashutosh Roy: I cannot recall when I've been doing this for many years, a prediction like this that has a 100% number on the predictor and a fine frame which is basically 12 months from now or a few months from now and running on an average 12 months. What that means and we are seeing this that every CEO of a large business is urgently demanding that their teams apply generative AI technology and the key application apply generative AI technology to reduce operating cost and do it upscale so they move the needle.
Eric Smit: I just did EBITDA on margin for the fiscal year was 12% compared to 9% in the prior fiscal year. Turning to our balance sheet and cash flows for the full fiscal year, cash flow from operations was 12.4 million, or a 13% operating cash flow margin. During fiscal 2024, we repurchased approximately 2.8 million shares at an average price of $6.28 per share, totaling $17.3 million. Since inception, we have purchased 3.5 million shares for 12% of the shares outstanding when we began the buyback program. Of the $40 million authorized, $17 million remained available under the program at the end of the year.
Speaker Change: and Justin Ibitar Morgan for the fiscal year was 12% compared to 90% in the prior fiscal year.
Speaker Change: Training to our balance sheet and cash flows for the four fiscal year cash flow from operations was 12.4 million or a 13% operating cash flow margin.
Speaker Change: During fiscal 2024, we repurchased approximately 2.8 million shares at an average price of $6.28 per share, totaling $17.3 million.
Speaker Change: Simpson section, we have purchased 3.5 million chairs for 12% of the chairs outstanding when we began the buyback program.
Ashutosh Roy: As we know customer service is one of the significant operating line item costs in business. Given that Gen AI needs a solid knowledge foundation to deliver that value as Gartner points out, not surprising that we are seeing more and more businesses looking to centralize and modernize the knowledge platform.
Speaker Change: of the $40 million water rights, $17 million remains available under the program at the end of the year.
Eric Smit: Balance sheet remains very strong; total cash and cash improvements at the end of the year were 70 million compared to 73.1 million a year ago.
Speaker Change: The balance sheet remains very strong, total cash and cash improvements at the end of the year. We're 70 million compared to 73.000 in a year ago.
Eric Smit: Now, turning to our customer metrics, with our focus on AI knowledge, I've broken out the knowledge metrics from the total metrics. As a reminder, total metrics were impacted by the two conversations and analytics customers' losses we had previously discussed. Outside of these losses, I'm pleased to report that all material customer renewals came in as planned during the quarter. Looking at LTM dollar-based SaaS net retention for knowledge customers, it came in at 97%, that while total net retention was 85%. LTM dollar-based SaaS net extension rate for knowledge customers was 106, while our total net extension rate was 103.
Ashutosh Roy: So as we've been saying for a few quarters, we are doubling down on this AI knowledge market opportunity. Currently, half of our revenue comes from AI knowledge offerings. Over the past year, we have increasingly rotated our R&D investments towards AI knowledge costs. As you may know, we launched a system GPT, an eGain product in February this year, a novel solution to automate and accelerate what are routine but time-taking tasks for customer service agents and knowledge authors.
Speaker Change: Now, turning to our custom metrics with our focus on AI knowledge of broken out the knowledge metrics from the total metrics.
Speaker Change: As a reminder, total metrics were impacted by the two conversation and analytic customers losses with my previous seat discussed.
Speaker Change: Outside of these losses, I'm pleased to report that all material customer annules came in as planned during the quarter.
Speaker Change: Looking at LTM dollar-based sets net retention for knowledge customers, that came in at 97% that while total net retention was 85%.
Ashutosh Roy: This has been into the article this season in the market. Historically, knowledge, centralization and creation of scale has been what you would call a proverbial guardian not and we are helping clients flash through it with the eGain AI knowledge offerings.
Speaker Change: LTM Dollar Base, Seth Nettix, Entry Rate for Knowledge Customers was no 6 while our total Nettix Entry Rate was 103.
Eric Smit: Looking at total ARR, total SaaS ARR for knowledge customers increased 8% year-over-year, while total SaaS ARR decreased 10% year-over-year. Looking at our remaining performance obligations, total ARR decreased 19% year-over-year; it was up 16% sequentially from last quarter. As renewals came in, as I mentioned, and we also had strong new bookings in the quarter. Our short term ARR was 60.4 million, down 9% year-of-year, but up 26% sequentially.
Speaker Change: Looking at total ARR, total SSAR for knowledge customers increased 8% Euro via, while total SSAR, increased 10% Euro via.
Ashutosh Roy: Before I ask Eric, I want to mention that our annual customer event solved 24 will be held in Chicago on October 29th and 30th. Our event will have many clients sharing success stories using our AI knowledge hub and we will also announce them on new product capabilities. So we are very excited about that and now all is ready.
Speaker Change: Looking at our remaining performance obligations, total of your decrease in 19% year of a year, that was up 16% sequentially from last quarter, as Renewals came in as I mentioned, and we also had strong new bookings in the quarter.
Speaker Change: Our short term of year was 60.4 million down 9% year over year, but up 26% sequentially.
Eric Smit: Now, onto our financial outlook in guidance. One item I'd like to call out before providing our guidance is the expected change in revenue forecasted from our Cisco OEM business. As I mentioned last quarter, we are seeing the shift to more reasonable recognition, and we estimate the change will result in the furl of approximately 1.3 million of revenue that would have otherwise been recognised in fiscal 2025. Just to be clear, we don't expect to lose this revenue, but rather instead recognize it more rateably than up front that we've done in previous weeks. We see most of that impact taking place in Q1 of 25.
Speaker Change: Now, on to our financial outlook in guidance, one item I'd like to call out before providing our guidance is the expected change in revenue forecast for Marcisco OEM business.
Eric Smit: Thanks, Ashut. And thanks everyone for joining us today. Let me provide more details about the financial results for the fourth quarter in full year of fiscal 2024.
Speaker Change: As I mentioned last quarter we are seeing the shift to more ratesable recognition and we estimate the change will result in the furl of approximately 1.3 million revenue that would have otherwise been recognized in fiscal 2025.
Eric Smit: Before discussing our outlook and guidance for fiscal 2025. Looking at our revenue, total revenue for the fourth quarter was 22.5 million ahead of our guidance but down 9% year of year. The decline was primarily due to the impact of the large two large plant losses we had discussed on our Q2 call. One of them from our conversation hub and the other from our analytics hub. For the fourth year, total revenue was 92.8 million down 5% year over year.
Speaker Change: Just to be clear, we don't expect to lose this revenue, but right instead, recognize it more rateably than upfront that we've done.
Speaker Change: in the previous week.
Speaker Change: and we see most of that impact taking place in Q1 of 25.
Eric Smit: For the first amount of guidance, for the first quarter of fiscal 2025, we expect total revenue between 21.4 million to 21.8 million. Turning to the bottom line for Q1, we expect a net loss of 400. 1000 to 1.3 million for a net loss of 1.5 cents per share, which includes stock-based compensation expense of approximately 900,000 and depreciation and amortization of approximately 120,000. We expect non-GAAP net loss of 400,000 to net income of 500,000, or a loss of 1 cent to a gain of 2 cents per share of a quarter. Looking at fiscal 2025, full year ending June 30th, 2025, we expect total revenue of between 92,000,000 to 93 million, non-GAAP net income of 5,000,000 to 6,000,000 or 17 cents to 20 cents per share, and GAAP net income of breakeven to a million dollars or 0 to 3 cents per share.
Speaker Change: For the first quarter of fiscal 2025, we expect total revenue of between 21.4 million to 21.8 million.
Eric Smit: And looking at our revenue by region for the full year, North America accounted for 78% of total revenue the same as in the prior year. Looking at our non gap gross profits and gross margins gross profit for the fourth quarter was 15.9 million for a gross margin of 71% compared to a gross margin of 74% year ago and 71% lost quarter. For fiscal 2024, gross profit was 66.4 million for a gross margin of 72% compared to 74% of the prior year.
Speaker Change: Turning to the bottom line for Q1 we expect net loss of 400.
Speaker Change: Helding.
Jim Byers: Jim 1.3 million, or a net loss of 1 cent to 5 cents per share, which includes stock-based compensation expense of approximately 900,000 in depreciation and amnotization of approximately 120,000.
Jim Byers: We expect non-gap net loss of 400,000 to net income of 500,000 or loss of 1 cent to again of 2 cents per share for the quota.
Eric Smit: Now turning to our operations, non gap operating costs for the fourth quarter came in at 13.7 million down 8% from 14.9 million in the year ago quarter reflecting the expense controls we implemented earlier in the year. Non gap operating costs for the fourth fiscal year were 56 million down 13% year over year.
Jim Byers: Looking at fiscal 2025, 4-year ending June 30, 2025, to expect total revenue of between 92 million to 93 million.
Jim Byers: 9 Gapnade Incum, a 5 million, 26 million or 17 cents to 20 cents per share.
Jim Byers: and Gapnets income up right even to a million dollars or zero to three cents per share.
Eric Smit: We estimate share-based compensation expense of approximately $5 million and depreciation and amortization expense of approximately $400,000. Looking at weighted average shares outstanding, we expect approximately 29.3 million shares for the first quarter and 29.7 million for the full year.
Jim Byers: We estimate share-based compensation expensive approximately $5 million and depreciation and amitulation expensive approximately $400,000.
Eric Smit: As we see increase momentum from our AI knowledge offering, we plan to increase investments, particularly in R&D and brand marketing to capitalize on this very exciting opportunity. Looking at our bottom line, 44, non gap net income was 2.5 million for eight cents per share compared to 3.6 million for 11 cents per share in the year ago quarter. Adjusted EBITDA margin for the quarter was 11% compared to 16% in the year ago quarter.
Jim Byers: Looking at weighted average shares outstanding, we expect approximately 29.3 million shares for the first quarter and 29.7 million for the fourth year.
Eric Smit: So in summary, we are seeing continued strong momentum with new customers for our AI knowledge offering. And while we double down on the AI knowledge market opportunity, we are remaining focused on ensuring high customer satisfaction and delivering full business value to our conversation and analytics customers.
Jim Byers: So, in summary, we are seeing continued strong momentum with new customers for AI knowledge offering.
Speaker Change: and while we double down on the AI knowledge market opportunity, we are remaining focused on ensuring high customer satisfaction and delivering full business value to our conversation and then a little bit of customers.
Eric Smit: For the fourth fiscal year, non gap net income was 1.3 million or 40 cents per share on a basic and 39 cents per share on a diluted basis up 47% on a dollar basis from non gap net income of 8.4 million. Or 26 per share on a basic and 25 cents per share on a diluted basis in the prior fiscal year. I just did EBITDA on margin for the fiscal year was 12% compared to 9% in the prior fiscal year.
Eric Smit: Lastly, we will be hosting an investor and Alice Day event in conjunction with the upcoming customer event in Chicago on October 29th. This event is a great opportunity for prospective investors and analysts to meet with customers and learn more about our business. You can register for the event on our website. We hope you can join us.
Speaker Change: Bosley, realve hosting an investment LST event in conjunction with the upcoming customer event.
Speaker Change: in Chicago on October 29. This event is a great opportunity for prospective investors and analysts to meet with customers and learn more about our business. You can register for the event on our website. You can join us. This concludes our prepared remarks, operator, we'll now open the call for questions.
Jim Byers: This concludes our prepared remarks. Or greater, we'll now open the call for questions. We'll now begin the question and answer session. To ask a question, you may press star, then one on your touchtone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two.
Eric Smit: Turning to our balance sheet and cash flows for the full fiscal year cash flow from operations was 12.4 million or a 13% operating cash flow margin. During fiscal 2024, we repurchased approximately 2.8 million shares at an average price of $6.28 per share, totaling $17.3 million. Since inception, we have purchased 3.5 million shares for 12% of the shares outstanding when we began the buyback program. Of the $40 million authorized $17 million remained available under the program at the end of the year. Balance sheet remains very strong, total cash and cash improvements at the end of the year were 70 million compared to 73.1 million a year ago.
Speaker Change: We'll now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speaker phone, please pick up your handset before pressing the keys.
Speaker Change: If at any time your question has been addressed, and you would like to withdraw your question, please press star then too.
Jeffrey Rhee: Our first question comes from Jeff Van Ree with Craig Hallem.
Ashutosh Roy: Please go ahead. Hey guys, great. Thanks for taking the questions. Real nice. A handful of questions, if I could. You know, I'm curious in the AI knowledge wins. You talked about two or three specific customers and would love to hear a bit about the competitive landscape. I think you said in one, you took out a homegrown solution, and in others, I don't recall. I think you might have had a Salesforce competitor in the second if I recall. Just talk about the competitive landscape. What are you displacing and what are you competing with? Yeah.
Speaker Change: Our first question comes from Jeff Vanry with Craig Kalim. Please go ahead.
Jeff Vanry: Hey, guys, great. Thanks for taking the questions. Really nice. Quarade, I hand-followed questions if I could. You know, I'm curious on the AI knowledge wins. You know, you talked about two or three specific customers.
Speaker Change: and we'd love to hear a bit about the competitive landscape. I think you said in one, you took out a homegrown solution and others. I don't recall, I think you might have had a Salesforce competitor in the second if I recall. But just talking about the competitive landscape, what are you displacing and what are you competing with?
Eric Smit: Now, turning to our customer metrics, with our focus on AI knowledge, I've broken out the knowledge metrics from the total metrics. As a reminder, total metrics were impacted by the two conversations and analytics customers losses we had previously discussed. Outside of these losses, I'm pleased to report that all material customer renewals came in as planned during the quarter. Looking at LTM dollar-based SaaS net retention for knowledge customers, it came in at 97% that while total net retention was 85%.
Ashutosh Roy: I should hear Jeff yet. Let me maybe take a few seconds to give you a sense of what both in terms of the customer profile we are going after, as well as what we are seeing in terms of incumbency, replacement and competition. Who we are going after, as you know, are customers who have, at this point, we target companies with 5,000 employees or more. That's what we, that's our sweet spot as companies that are 5,000 employees or more. It's so typically $1,000-plus investment now. We do get customers who are below that. But when these large companies have complex content and compliance needs, and where agents learn over the issue, that's where we do help.
Speaker Change: Yeah, I was in Ashutosh Roy, Eric Smit, so...
Speaker Change: Let me maybe take a few seconds to give you a sense of what both in terms of the customer profile we're going after as well as what we're seeing in terms of in-competition.
Speaker Change: So...
Speaker Change: who we're going after as you know are customers who...
Speaker Change: Have at this point, we target companies with 5000 employees a month, that's what our sweet spot is companies that are 5000 employees or more. So typically, we'll be in dollar plus and dollars now. We do get customers a lot below that. When these large companies have...
Eric Smit: LTM dollar-based SaaS net extension rate for knowledge customers was 106, while our total net extension rate was 103. Looking at total ARR, total SaaS ARR for knowledge customers increased 8% year-of-year while total SaaS ARR decreased 10% year-of-year. Looking at our remaining performance obligations, total ARR decreased 19% year-of-year, it was up 16% sequentially from last quarter. As renewals came in, as I mentioned, and we also had strong new bookings in the quarter. Our short term ARR was 60.4 million down 9% year-of-year, but up 26% sequentially.
Speaker Change: Complex, content and compliance needs.
Speaker Change: and where each and everyone over the issue, that's where we do have. So that's the need that we are targeting on the side of the companies.
Ashutosh Roy: So that's the need that we are targeting the size of the company. In terms of who we end up being, winning more and more is where there has been a failed knowledge project. And typically that's getting more and more highlighted because people are recognizing that when they're doing these genie-eye investments in final automate customer service, they realize that trusted content and trusted knowledge needs to be fed into the genie-eye tool for them to do their job on the event. So we are replacing; I would say, number one replacement for us is SharePoint. Homegrown, essentially, that's what it means, right?
Speaker Change: In terms of who we end up being winning more and more is where there has been a failed knowledge project.
Speaker Change: and typically that's getting more and more highlighted because people are recognizing that when they do it, these genuine investments in trying to automate customer service.
Eric Smit: Now, onto our financial outlook in guidance. One item I'd like to call out before providing our guidance is the expected change in revenue forecasted from our Cisco OEM business. As I mentioned last quarter, we are seeing the shift to more reasonable recognition and we estimate the change will result in the furl of approximately 1.3 million of revenue that would have otherwise been recognised in fiscal 2025. Just to be clear, we don't expect to lose this revenue, but rather instead recognise it more rateably than up front that we've done in previous weeks.
Speaker Change: They realized that trusted content and trusted knowledge needs to be fed into the January I do for them to do their job in the event. So we are replacing, I would say, number one replacement for us is Sherpon.
Ashutosh Roy: Number two is Consulance replacement. Again, homegrown. Number three replacement is Salesforce. So people deploy Salesforce Knowledge, and it's not delivering the value as much as they want, right? And the pressure is on to do more. And the fourth one that we have been replacing is Genesis Knowledge. So, but Salesforce and Consulance are the dominant ones in terms of income and see, because they've been around for a while and people have their own solutions. And the last part of these responses, in terms of competitors, I would say broadly those are the competitors that we are also working up against, right?
Tom Grom: Tom Grom, essentially, that's what it means, right? Number two is consulence replacement. Again, Number three replacement is...
Speaker Change: Jim Horses
Speaker Change: So people deploy Salesforce knowledge and it's not delivering the value as much as they want, right, and the pressure is long to do more. And the fourth one that we have been replacing is Genesis's knowledge.
Eric Smit: We see most of that impact taking place in Q1 of 25. For the first amount of guidance, for the first quarter of fiscal 2025, we expect total revenue between 21.4 million to 21.8 million, turning to the bottom line for Q1, we expect net loss of 400. 1,000 to 1.3 million for a net loss of 1,000 to 5,000 per share, which includes stock-based compensation expense of approximately 900,000 in depreciation and amortization of approximately 120,000.
Eric Smit: We expect non-gap net loss of 400,000 to net income of 500,000 for a loss of 1,000 to again of 2 cents per share of the quarter. Looking at fiscal 2025, four year ending June 30, 2025, we expect total revenue of between 92,000 to 93,000, non-gap net income of 5,000 to 6,000 or 17 cents to 20 cents per share and gap net income of right even to a million dollars or zero to 3 cents per share.
Speaker Change: But Salesforce and Constuence Albert, the dominant one in terms of incomprehensible. Because they've been around for a while and people have their own words.
Speaker Change: and the last part of these responses in terms of complexity is I would say.
Ashutosh Roy: The people who are trying to retain those knowledge setups, and we are in the replacement business.
Speaker Change: Broadly, those are the competitors that we're also working up against, right? The people who are trying to retain those knowledge setups and we are under replacement business.
Ashutosh Roy: Okay, that's helpful. And in the presentation, you talk about the conversion of pilots to customers. I think you quote a 75% number in there. Obviously, very, very good number. It gives me a sense of sample size here. I mean, what's the quality of that indication and the ability to repeat that? I would say more than 10 in the last few, in the last couple of orders, right? And is there anything about those that gives you doubts that you can retain that pace of conversion? That's hard to say. I feel like we know how to qualify much better now.
Speaker Change: Okay. That's all. And in the presentation, you talk about the conversion of, um,
Speaker Change: Pilots to customers, I think you quote a 75% number there, yeah in there. Obviously very, very good number. It gives a sense of sample size here. I mean, what's the quality of that indication and the ability to repeat that?
Speaker Change: I would say more than 10 in the last few, in the last couple of orders, right?
Speaker Change: And is there anything about those that gives you doubt that you can retain that, that pace of conversion?
Eric Smit: We estimate share-based compensation expense of approximately $5 million and depreciation and amortization expense of approximately 400,000. Looking at weighted average shares outstanding, we expect approximately 29.3 million shares for the first quarter and 29.7 million for the fourth year.
Speaker Change: How to say, I feel like we know how to grow the fire much better now and that's probably what I would say.
Ashutosh Roy: And that's probably what I would say. So we are, I think part of the reason for the conversion rate being that high is that we have to find things well before we put them through the innovation pilot. As long as we do that, I think we should be good.
Speaker Change: We are, I think part of the reason for the conversion rate being back high is that we have to all find things well before we put them through the innovation pilot.
Eric Smit: So in summary, we are seeing continued strong momentum with new customers for AI knowledge offering. And while we double down on the AI knowledge market opportunity, we are remaining focused on ensuring high customer satisfaction and delivering full business value to our conversation and then a little bit of customers.
Ashutosh Roy: But if we expand that, and we're doing that with some partners we're developing, then I expect that some of those partner-led pilots might actually have perhaps a smaller conversion rate. On the sales front, I think you said you're going to spend a bit on sales, if I recall, around branding, and then a bit on development. What about quota reps? Are you at the right head count? Where are your quota rep? Why is where do you think it could be in 12 months? So we feel that the biggest opportunity right now is to drive more pipeline and generate more pipeline.
Speaker Change: So as long as we do that, I think we should be good, but if we expand that, and we are doing that with some partners we are developing, then I expect that some of those partners left by let's might actually have perhaps a smaller contribution, perfect, low completion.
Speaker Change: I'm the sales front, I think you said you're going to spend a bit on sales if I recall around branding and then a bit on development. What about quarter reps so you at the right-hat count where are you a quarter rep right wise? Where do you think it'll be in 12 months?
Eric Smit: Mostly, we will be hosting an investment analyst day event in conjunction with our upcoming customer events in Chicago on October 29. This event is a great opportunity for prospective investors and analysts to meet with customers and learn more about our business. You can register for the event on our website. We hope you can join us.
Speaker Change: So, we feel that the biggest opportunity right now is to drive more pipeline and generate more pipeline. And that's why we are focusing on the ground and something sort of market demand investments.
Ashutosh Roy: And that's why we are focusing on the ground and front end sort of market demand investment. We feel that we are in a good place with our reps, especially because on the other side there's a reasonable, we're still talking about north of 200,000 AI miles from new locals. So we feel like we can manage that reasonably well with all the growth expectations we have on the AI knowledge booking site.
Operator: Let's conclude our prepared remarks. Our operator will now open the call for questions. We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speaker phone, please pick up your hands before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two.
Speaker Change: [inaudible] We are still talking about not the 200,000 A.L.R.R. for new levels.
Speaker Change: So we feel like we can manage that reasonably well with all the growth expectations we have on the AI knowledge booking side.
Ashutosh Roy: Okay, and one last if I could squig get in. Obviously, you've got a couple things going on here: knowledge on one side catching a tailwind. And then conversation and analytics, and obviously your focus there is customer satin and keeping butts in seats, so to speak. You know how do you have the two big customer churn off a couple quarters ago? I'm sure you've got your ears really tuned. I mean, how are you getting comfortable in the conversation and analytics hub base that you're not at risk with any other customers in avoiding future large churn? Yeah, that's a good point.
Jeffrey Rhee: Our first question comes from Jeff Vanry with Craig Callum. Please go ahead. Hey, guys, great. Thanks for taking the questions. It's really nice.
Speaker Change: And one last of I could speak it in, the obviously you've got a couple of things going on here in knowledge on one side catching a tailwind and in conversation and analytics and obviously your focus there is customer satin and keeping butts and seats so to speak. You know how you have the two big customer's turn off a couple of quarters ago. I'm sure you've got yours really tuned. I mean, how are you getting comfortable in the conversation and analytics hub base that you're not at risk with any or other customers in avoiding future large turn.
Ashutosh Roy: Quarterly, a handful of questions if I could. I'm curious in the AI knowledge wins. You talked about two or three specific customers and would love to hear a bit about the competitive landscape. I think you said in one, you took out a homegrown solution and others. I don't recall. I think you might have had a sales force competitor in the second if I recall. Just talking about the competitive landscape. What are you displacing and what are taking a few seconds to give you a sense of what both in terms of the customer profile we're going after as well as what we're seeing in terms of infundancy, replacement, and competition.
Ashutosh Roy: We are, as you can only expect, we are hyper focused on that satisfaction value delivery and continuing to work with these clients to find opportunity. And it happens with the sort of cycle time that every one of these customers has as they are investing on the knowledge and AI side, finding ways to get into that slip stream of knowledge and AI opportunity as well because then that creates collective stickiness and these accounts.
Speaker Change: Yeah, that's a good point. We are, as you can only expect, we have a hyper focused on that satisfaction, value delivery, and continuing to work with these clients too.
Speaker Change: Find Opportunity then and it happens with the sort of cycle time that everyone of these customers has.
Speaker Change: Out there investing on the knowledge and the outside finding ways to get into that slipstream of knowledge and AI opportunity as well because then that creates elective stickiness and these accounts.
Ashutosh Roy: So, who we're going after as you know are customers who have at this point we target companies with 5,000 employees in the world. That's what our sweet spot is companies that are 5,000 employees or more. So, typically billion dollar plus and a half. We do get customers complex contents and compliance needs, and where each internal there is an issue, that's where we do have. So that's the need that we are targeting in the size of the companies.
Jeffrey Rhee: Got it. Okay, great.
Jeffrey Rhee: Thanks for taking my questions. Appreciate it.
Speaker Change: Got it. Okay, great. Thanks for taking my questions. Appreciate it.
Richard Baldry: Our next question comes from Richard Baldry with Ross Capital. Please go ahead. Thanks. You guys are tended to be pretty conservative on the spending side.
Speaker Change: Our next question comes from Richard Balldry with Roth Capital. Please go ahead.
Ashutosh Roy: Some sort of curious that only a couple quarters ago we were talking about cost controls, and now we're talking about investments. Could you maybe talk about what you're seeing that's changing there? Whether that's top of the funnel, fail cycles, arpeuse, sort of give us some backdrop for why that positive shift in sort of your stance looking forward. Okay. So I'll say. One is that there are three things. One is that with existing clients. We are seeing a consistent increase in interest in faster roll out of knowledge across other businesses or other functions like self service or enterprise facing.
Richard Balldry: Thanks. You guys are tended to be pretty conservative on the spending side. Some sort of curious that only a couple quarters ago were talking about cost controls, and now we're talking about investments. So, could you maybe talk about what you're seeing that's changing there, whether that's...
Ashutosh Roy: In terms of who we end up being winning more and more is where there has been a failed knowledge project. And typically that's getting more and more highlighted, because people are recognizing that when they do it, is genuine investments in trying to automate customer service. They realize that trusted content and trusted knowledge needs to be fed into the genuine I do for them to do their job on the other hand. So we are replacing, I would say number one placement for us is Sherpa.
Speaker Change: You know, top of the funnel, sales cycles are produced, sort of give us some backdrop for why that positive shift and sort of your, your, your stance looking forward.
Speaker Change: Okay, so I'll say...
Speaker Change: 2 things, one is that they are three things really, one is that with existing clients.
Speaker Change: We are...
Speaker Change: Seeing a consistent...
Speaker Change: Increase and interest in faster rollout of knowledge across other businesses or other functions like self-service or in the price-facing. So for those where we are already with, we are in there with agent-facing knowledge solutions.
Ashutosh Roy: So for those where we are already with no, we are in there with engine facing knowledge solutions. So that's one right. And so that's our kind of the most reliable year to the ground. And the next thing we're seeing is more inbound interest, and that has been consistently edging up even in the summer months, as I mentioned. It's very unusual for us to be this busy in the summer months on the on that sort of sales side. This has been unusual. As Eric and I were talking, we felt like last time we were this active and busy was summer of 2019.
Ashutosh Roy: Omg, essentially, that's what it means, right? Number two is control and replacement. Again, Omg, number three replacement is Salesforce. So people deploy Salesforce knowledge and it's not delivering the value as much as they want, right? And the pressure does not do more. And the fourth one that we have been replacing is Genesis's knowledge. So Salesforce and consequence of the dominant ones in terms of income. Because they've been around for a while and people have their own ones.
Smit: Smit, that's one of the most reliable year to the ground.
Smit: In the next thing we are seeing is more inbound interest and that has been consistently an edging up even in the summer months as I mentioned. It's very unusual for us to be just busy with summer months on that sort of.
Smit: Say, I was sorry, this was in unusual, as Eric and I were talking, we felt like last time we were this active and busy was.
Ashutosh Roy: And the last part of these responses in terms of competitors, I would say broadly those other competitors that we are also working up against, right? The people who are trying to retain those knowledge setups. And we are under replacement systems. Okay.
Ashutosh Roy: It's been a while. So that's the second item, and then the third thing that has changed is. I'm noticing this, and our sales leadership is also pointing it out that we are seeing more and more of these opportunities prosecute all the way to decision much more predictably than before. So people, when they come in, the amount of tire-taking is going down. People are executing RFPs, and they say they will execute; it's kind of happening around that time, and eventually they decide whether we win or not. So those are the three things we are seeing that's making us change our investment posture, and like Eric said, this is an important Richard. You know, right now we are saying product investment and then grand marketing investment; those are the two primary areas we are investing right now.
Eric Smit: Summer was 2019, right? It's been a while. So that's the second item. And then the third thing that has changed is...
Jeffrey Rhee: That's all.
Speaker Change: I'm noticing this and our sales leadership is also pointing it out that we are seeing more and more of these opportunities for us to cute all the way to decision much more predictably down in the fourth. So people when they come in.
Jeffrey Rhee: And in the presentation, you talk about the conversion of pilots to customers. I think you quote a 75% number there in there. Obviously, very, very good number. It gives a sense of sample size here. I mean, what's the quality of that indication in the ability to repeat that? I would say more than 10 in the last few in the last couple of quarters. And is there anything about those that gives you doubts that you can retain that, that pace of conversion?
Speaker Change: The amount of power taking is going down, people are executing our fees and they say they will execute it kind of happening around that time and eventually they decide it whether we're going or not. So, those are the greetings we are seeing that's making a change out.
Speaker Change: I'm Dustin Puster and I'd like, as I said, this is important, which is, you know, right now we're saying product investment and then, driving marketing investment, like those are the two primary areas we're investing right now and then as the pipeline gets to a point where it starts to become really, um...
Ashutosh Roy: And then as the pipeline gets to a point where it starts to become really not something we can handle with our current sales capacity, we are going to lag with that change investment in the past. You know, quarter two, you have gone through it to pretty specifics about some of your larger trial hours or how they fit into the opportunity, et cetera. Is there any update to that, any changes, any new sort of larger scale pilots going on that are continuing sort of to fill that top of the funnel while others are working their way through.
Jeffrey Rhee: That's hard to say. I feel like we know how to qualify much better now. And that's probably what I would say. So we are, I think part of the reason for the conversion rate being that high is that we are qualifying things well before we put them through the innovation pilot. As long as we do that, I think we should be good. But if we expand that, and we're doing that with some partners we're developing, then I'll expect that some of those partner-led pilots might actually have perhaps a smaller conversion, right? Well, conversion. Mm-hmm.
Speaker Change: Not something we can handle with our currency else capacity, but we're going to lag with that change in the estimate of that point.
Speaker Change: Got it. And in the past, you know, quarter to you, you've gone through some pretty specific about some of your larger trailers or how they fit into the importance of dirty, etc.
Speaker Change: Is there any update to that any changes any new sort of larger scale pilot's going on? They're continuing sort of to fill that back.
Ashutosh Roy: And I know it's hard because it's sort of lumpy, but I'm just curious if there's anything there. A couple of things I'll say: I think the quality of companies we are engaging with in terms of size and brand continues to be very good, right? So for example, the mega brand, when I said the financial mega brand, I meant a mega brand in the US, on the financial side. When I said multinational conglomerate, where we have just got a foot in the door with a reasonably chunky ARR deal in Germany specifically, this was Europe, we're talking about a global 100 company, right?
Jeffrey Rhee: On the sales front, I think you said you're going to spend a bit on sales if I recall around branding, and then a bit on development. What about quarter reps? So you at the right-hand count where are you a quarter rep right-wise? Where do you think it'll be in 12 months? So we feel that the biggest opportunity right now is to drive more pipeline and generate more pipeline. And that's why we are focusing on the ground and some things sort of market demand investments.
Speaker Change: Top of the funnel while others are working their way through and I know it's hard because it's sort of lumpy but just curious if there's anything there
Speaker Change: Thank you very much.
Speaker Change: I think the quality of companies we're engaging with in terms of size and brand continues to be very good. So, for example, the...
Speaker Change: Megan Brown is going to set the financial mega grant I meant a mega grant in the US on the financial side
Jeffrey Rhee: We feel that we are in a good place with our reps, especially because our deals sizes are reasonable. We're still talking about knowledge of 200,000 air loss from new logos. So we feel like we can manage that reasonably well with all the growth expectations we have on the air knowledge booking side.
Megan Brown: I'm going to say that.
Speaker Change: Multinationals can do omelet where we have just got a foot in the door with a
Speaker Change: Now, reasonably chunky ARR deal in Germany, specifically this was in Europe.
Ashutosh Roy: So these are very large companies, even on the locals that we are acquiring. Then, on the pilot side, I feel like, if I look at it, there are many large companies now. One of the things we do see, and this is a secular thing, we don't see as many multi-million dollar ARR initial purchases anymore; we just don't see that. What we see is the average is pretty good. Like I said, it's not for 200K, right? At it, it's not for 200K, initial ARR. But the quality of these companies is large; the potential is large. So I feel like that is a good trend for us.
Speaker Change: We're talking about a global 100 conflict. So, these are very large companies, even on the logos that we are acquiring, then on the pilot's side, I'll see you later.
Jeffrey Rhee: Okay, and one last of I could switch it in. Obviously, you've got a couple of things going on here in knowledge on one side catching a tailwind and in conversation and analytics. And obviously your focus there is is customer satin and keeping butts and seats so to speak. You know, you had the two big customer sure enough, a couple of quarters ago. I'm sure you've got yours really tuned. I mean, how are you getting comfortable in the conversation and analytics hub base that you're not at risk with any air. Their customers and avoiding future large churn.
Speaker Change: So I look at it.
Speaker Change: The...
Speaker Change: There are many large companies out. One of the things we do see here and this is a secular thing. We don't see as many multi-million dollar ARR in the show for children anymore.
Speaker Change: We just don't see that. What we see is the average is pretty good, like I said, it's lost for 200k, right? Eric? Yep, not the 200k initial error, but the quality of these companies is large, the potential is large, so I feel like that is a good trend for us.
Jeffrey Rhee: Yeah, that's a good point. We are as you can only expect. We have a hyper focused on that satisfaction value delivery and continuing to work with these clients to find opportunities. And it happens with the sort of cycle time that everyone of these customers has. Out there investing on the knowledge and AI side finding ways to get into that slipstream of knowledge and AI opportunity as well. Because then that creates elective stickyness and they can be the cast. Got it. Okay, great. Thanks for taking my questions. Appreciate it.
Ashutosh Roy: Then last for me, you know, you're still sitting on a pretty good amount of cash on the balance sheet, even after doing some pretty meaningful buybacks. Is there anything interesting in sort of on the technology side, whether it's, you know, to keep wrapping more product around the AI side of the table, or you think your capital allocation still remains for a focus on the buybacks over the year term? Thanks. So we are increasing investment; I know it's not. It's a big thing that it's not going in a big hole in the balance sheet, but we are increasing investment.
Speaker Change: And then last from me, you're still sitting on a pretty good amount of cash on the balance sheet, even after doing some pretty meaningful buyback. Is there anything interesting sort of on the technology side, whether it's...
Speaker Change: You know, to keep wrapping more product around the AI side of the table, or you think your capital allocations still remains for a focused on the buy-backs and hope in your turn. Thanks.
Speaker Change: So, we are increasing understanding, I know it's not.
Speaker Change: Good thing that is not running a big hole in this balance sheet, but we are increasing investment and in terms of the rotation that we've done in new innovation, so we have a very chunky amount of money that we are putting in with people.
Ashutosh Roy: And in terms of the rotation that we've done in new innovation. So we have a very chunky amount of money that we are putting in with people, and the amount of people living around their knowledge. That is an area that will continue to invest. And for some time, because we think there's a lot of way to differentiate as well as make an attempt to dominate the emerging market of AI knowledge systems. So I would say that's our primary focus right now. Got it, thanks.
Richard Baldry: Our next question comes from Richard Baldry with Roth capital. Please go ahead. Thanks. You guys are tended to be pretty conservative on the spending side. Some sort of tourists at only a couple quarters ago were talking about cost controls and now we're talking about investments. So could you maybe talk about what you're seeing that's changing there. Whether that's, you know, top of the funnel sales cycles are approved. Sort of give us some backdrop for why that that positive shift and sort of your your stance looking forward.
Speaker Change: and their capability around their knowledge.
Speaker Change: That is an area that we will continue to invest and it is for some time because we think there is a lot of some way to differentiate as well as
Speaker Change: Make an attempt to dominate the emerging market of AI knowledge systems.
Speaker Change: I'm trying to focus right now.
Jim Byers: It includes our question and answer session.
Richard Baldry: Okay. So I'll say. Two things. One is that there are three things really. One is that with existing clients. We are seeing a insistent increase in interest in faster roll out of knowledge across other businesses or other functions like self service or in the price facing. So for those where we are already with, you know, we are in there with agent facing knowledge solutions. So that's one right and so that's our kind of the most reliable year to the ground.
Speaker Change: Got it, thanks.
Ashutosh Roy: I would like to turn the conference back over to eGain management for any closing remarks. Thanks, everybody, for taking the time today, and before we see some of you at our silver bench in Chicago at the end of October. Thank you.
Speaker Change: Includes our question and answer session. I would like to turn the conference back over to E-Gain Management for any closing remarks.
Speaker Change: Well, thanks everybody for taking the time today, and the fourth of you seeing some of you at our sober vent in Chicago at the end of October. Thank you.
Operator: The conference is now concluded. Thank you for attending today's presentation.
Operator: You may now disconnect.
Speaker Change: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Richard Baldry: The next thing we're seeing is more inbound interest. And that has been consistently and aging up even in the summer months as I mentioned. It's very unusual for us to be this busy with summer months on that sort of. So that's the second item. And then the third thing that has changed is. The last time we were we were this active and busy was. Summer was 2019. It's been a while. So that's the second item.
Richard Baldry: And then the third thing that has changed is. I'm noticing this and ourselves leadership is also pointing out that we are seeing more and more of these opportunities for us to cute all the way to decision, much more predictably than before. So people in the comment, the amount of hard-tricking is going down, people are executing our fees and they say they will execute it kind of happening around that time and eventually they decide whether we're going or not.
Richard Baldry: So those are the greetings we're seeing that's making us change our investment posture. And I'd like, as I said, this is important, Richard, you know. Right now we're saying product investment and then brand marketing investment. Those are the two primary areas we're investing right now. And then as the pipeline gets to a point where it starts to become really not something we can handle with our current sales capacity, we're going to lag with that chance and that's what we're about to do.
Richard Baldry: Got it. And in the past, you know, quarter two, you've gone through some pre-specifics about some of your larger trailers or how they fit into the importance of 30, etc. Is there any update to that? Any changes? Any new sort of larger scale pilots going on? They're continuing sort of to fill that top of the funnel while others are working their way through. And I know it's hard because it's our lump even just curious if there's anything there.
Richard Baldry: A couple of things I'll say. I think the quality of companies we're engaging with in terms of size and brand continues to be very good. Right. So, for example, the mega brands when I said the financial mega brand, I meant a mega brand in the US on the financial side. When I said multi-national conglomerate where we have just got a foot in the door with a reasonably chunky ARR deal in Germany specifically this was Europe.
Richard Baldry: We're talking about a global 100 company. So, these are very large companies even on the logos that we are applying. Then on the pilot side, I see like if I look at it, there are many large companies now. One of the things we do see here, and this is a secular thing, we don't see as many multi-million dollar ARR initial purchases anymore. We just don't see that. What we see is the average is pretty good.
Richard Baldry: Like I said, it's not for 200K, right? Yep, not for 200K initial ARR, but the quality of these companies is large, the potential is large. So, I feel like that is a good trend for us. Then last for me, you're still sitting on a pretty good amount of cash on the balance sheet even after doing some pretty meaningful buyback. Is there anything interesting sort of on the technology side? To keep wrapping more product around the AI side of the table, or you think your capital allocation still remains focused on the buybacks and hope in your turn.
Richard Baldry: So, we are increasing investment currently. I know it's not. It's a good thing that it's not running a big hole in the balance sheet, but we are increasing investment. And in terms of the rotation that we've done in new innovation, so we have a very chunky amount of money that we are putting in with people and our capability around the AI knowledge, that is an area that will continue to invest. And for some time, because we think there's a lot of way to differentiate as well as make an attempt to dominate the emerging market of AI knowledge systems.
Richard Baldry: So I would say that's our primary focus right now. Got it, thanks. It includes our question and answer session. I would like to turn the conference back over to eGain Management for any closing remarks. Thanks, everybody, for taking the time today and before we see some of you at our silver bench in Chicago at the end of October. Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.