eGain’s QQ2 2025 results reflect a mix of near-term headwinds and meaningful long-term upside driven by AI-enabled knowledge management offerings. Total revenue declined 6% year over year to $22.4 million, mainly due to the exit of two large customers in the prior year, while SaaS revenue represented 93% of total revenue and remained the primary driver of growth. Non-GAAP gross margins held steady at 78% for SaaS, with overall gross margin at 71%. Despite higher non-GAAP operating costs (+9% YoY as R&D investments rise 21%), the company generated $6.4 million of cash flow from operations and ended the period with $70.5 million of cash and equivalents, underscoring a robust liquidity position.
Management emphasized a strategic pivot toward the AI Knowledge Hub, highlighted by a 17% year-over-year increase in ARR for AI knowledge customers and a concentration of seven-figure ARR opportunities in the sales pipeline. The company reiterated product momentum, including the planned launch of eGain AI Agent in the current quarter, and stressed that bigger deals may entail longer sales cycles and additional governance checks (AI office). The revised fiscal 2025 guidance reflects both the PS (professional services) revenue reassessment and a cautious cadence for large strategic wins, with revenue guidance narrowed to $88.5–$90.0 million and non-GAAP net income guidance of $4.1–$4.7 million. The near-term view remains mixed: limited near-term profitability is expected as investments scale, but the long-run trajectory centers on a scalable AI-first product platform and a broadened enterprise footprint.