eGain Corporation 2026 Q4 Earnings Call

Please go ahead. Thank you, operator, and good afternoon, everyone.

Welcome to eGain's fiscal 2026 fourth quarter and full year financial results conference call. On the call today are eGain's Chief Executive Officer, Ashu Roy, and Chief Financial Officer, Eric 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," "intend," "expect," "anticipate," or similar expressions. Forward-looking statements are protected by Safe Harbor provisions contained in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to a wide range of risks and uncertainties that could cause actual results to differ in material respects.

Information on various factors that could affect eGain's results are detailed in the company's reports filed with the Securities and Exchange Commission. eGain is making these statements as of today, September 3rd, 2026, and assumes no obligation to publicly update or revise any of the forward-looking information in this conference call. In addition to GAAP results, we will also discuss certain non-GAAP financial measures, such as non-GAAP operating income. The tables included with the earnings press release include reconciliation of the historical non-GAAP financial measures to the most directly comparable GAAP financial measures. 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. Along with the earnings release, we will post an updated investor presentation to the investor relations page. Lastly, a phone replay of this conference call will be available for one week.

Now with that said, I'd like to turn the call over to eGain's CEO, Ashu Roy.

Thank you, Jim. Good afternoon, everyone. Right at the end of fiscal 2026, the category we have been building toward for years got a name. In July this year, Gartner published its first ever Magic Quadrant for Customer Service Knowledge Management Systems and named eGain a leader, positioned highest for ability to execute and furthest for completeness of vision. This inaugural Magic Quadrant matters more than just our position in it. This is the first time a top analyst firm has drawn a sharp boundary around this market and explicitly called out knowledge management for customer service as its own category of enterprise infrastructure. They base it on the volume and kind of client inquiries they get in this area. Therefore, they have chosen to invest Magic Quadrant level resources and attention to it. It is a very important signal for the market and the category that is building around it.

As we have said, there is good reason this buying category is emerging now. Generative AI has collapsed the old separation between instruction and data. What an AI agent or agentic workflow does in any live customer or employee assistance conversation is determined entirely by the policies, procedures, and know-how it is fed. When that knowledge is wrong, the AI is confidently wrong. When it is stale, the AI does not know it is out of date. So knowledge is no more documentation just for humans to optionally use. It is instruction for AI. Wrong knowledge equals wrong AI. Engineering that instruction layer, governing it, operating it continuously is what we call AI Knowledge Ops, a term that Gartner reflected in their Magic Quadrant report as something unique and important that eGain brings to this solution.

It is the discipline enterprises are now realizing they cannot skip if they want AI to reliably work in production, not just in pilot. With this market trend and the analyst acknowledgment, let me walk through how fiscal 2026 came together. Before I do that, let me define a term that we will use moving forward, and that is AI customer. An AI customer is an eGain customer who utilizes one or more of our AI offerings. With that said, let us look at full-year fiscal 2026. Our total revenue grew 3% to $91.1 million. Our AI customer revenue grew 20% year-over-year. AI customer ARR grew 13%, one three, and represented 72% of total SaaS ARR at year-end, up from 63% at the midpoint of fiscal 2026. This is an intentional shift in the shape of our customer base.

A growing majority of our SaaS ARR now sits with customers who are using one or more of our AI capabilities. Turning to new business, our momentum continued to build. In the fourth quarter, we won several new logos. A couple of examples here. First, a leading European insurance company. They set out to automate their service operation with AI. They recognized that they needed to put in place a governance knowledge foundation before they could deploy AI automation at scale. So they selected eGain to modernize their knowledge environment and establish that foundation. Second, a global multi-energy operator serving millions of customers. They faced a familiar barrier to scaling service, fragmented knowledge leading to inconsistent service quality. They are deploying our knowledge platform and AI agent in one contact center. Based on the successful blueprint from that deployment, they will extend to rest of their contact centers.

They also plan to activate self-service channels and leverage the knowledge hub across the entire business. In addition, we added several new paid pilots this quarter. Increasingly, we see buyers wanting to extensively validate our platform in their own environment before committing to a full rollout, and they're willing to pay for it. This is a shift from where we used to be, where we were doing a lot of free, quick trials and pilots as part of our eGain Innovation in 30 Days, the 30-day no-risk pilot that we had. Converting these paid pilots into at-scale production rollouts is a focus for us this fiscal year. I'll give you a couple of examples. One is one of the world's largest pharmaceutical companies.

Their use case is that their experienced scientists and specialists retire or change roles in their R&D teams, and the company risks losing a lot of deep tacit expertise. They're using our AI knowledge hub to capture that tacit knowledge on a continuous basis and turn it into invaluable knowledge for their AI engine. Second, a global leader in testing, inspection, and certification. They were facing a hard regulatory deadline, and they needed accurate instant guidance in a compliance-heavy environment. Early pilot results of our deployment indicate that the AI agents delivered 95% self-service resolution, and it's enjoying a strong 80% customer user satisfaction surveys. Third, a global leader in gaming technology. They operate in a complex environment where every answer has to be guided and correct. Stepping back to the market, I want to share two trends that we see emerging in the last couple of quarters.

First, businesses are treating knowledge as core AI infrastructure, and their tech and AI teams are actively building on top of this infrastructure, which drives demand for richer platform capabilities like real-time knowledge APIs and stringent service levels. So our growing developer-facing capabilities on our eGain Composer platform are being well received. Second trend we see is growing interest in customer self-service projects. Several new logos in the recent quarters have started out with self-service deployments, something we did not see a year ago when it was more common to start with contact center-based use cases. While contact center productivity is still of great interest, we sense that businesses are increasingly driving for ROI at scale on their AI investments. Moving to business momentum in fiscal 2026. Our new logo wins increased 27% year-over-year.

As I mentioned earlier, several of the new logos we acquired in fiscal 2026 have paid pilots in Global 2000 accounts, and they have significant upside, something we intend to pursue this fiscal year. Our pipeline opportunities, valued at $500,000 ARR or more, doubled in count year-over-year. And our core verticals, which are compliance-heavy, like banking, financial services, insurance, and healthcare, we grew our opportunities in the pipeline by 40% year-over-year, exactly where a trusted knowledge foundation matters the most. Turning to products, our innovation continues to accelerate with focus. Everything we launched in last quarter, which is in Q4, during our London eGain Solve event in May, fueled the cycle of knowledge and AI. First, we increasingly deploying AI in our platform to dramatically automate knowledge management.

The result of that generation and maintenance of trusted knowledge with low effort then drives better instruction to AI that is being used to reliably automate customer service and customer operations. A few of the noteworthy announcements of new capabilities we made in May. The first was the eGain AI Agent IVA, which is an intelligent voice agent. What is unique about it is that it is using the same trusted knowledge platforms as we use for all our digital self-service. That consistency and quality is something that now we can offer as a complete omni-channel self-service offering. Secondly, our eGain Agentic Studio, which is a zero-code application building environment we have launched so that business users can assemble these service use cases end-to-end, multi-step, complex processes with every step grounded in verified knowledge using assured tools and actions and invoking human oversight when needed.