eGain (NASDAQ:EGAN) reported fiscal 2026 revenue growth of 3% to $91.1 million as revenue from customers using its artificial intelligence offerings increased 20%. The company said it is shifting its reporting focus toward “AI customers,” defined as customers actively using one or more AI offerings, while its legacy non-AI business continues to decline.
Chief Executive Officer Ashu Roy said Gartner’s July publication of its first Magic Quadrant for Customer Service Knowledge Management Systems represented a significant market development. Gartner named eGain a leader and positioned it highest for ability to execute and furthest for completeness of vision, according to Roy.
AI Customer Mix Expands
eGain said AI customer annual recurring revenue, or ARR, rose 13% year over year and represented 72% of total SaaS ARR at the end of fiscal 2026, compared with 63% at the midpoint of the fiscal year. Total SaaS ARR declined 1%, which Chief Financial Officer Eric Smit attributed to declines among legacy non-AI customers.
The company has changed its metrics to report AI customer revenue and ARR at the customer level rather than by product hub. Under the new definition, AI customer ARR includes all SaaS ARR from customers using at least one AI offering, while AI customer revenue includes their SaaS and professional-services revenue.
Smit said eGain believes customer-wide adoption of its AI capabilities is a stronger indicator of retention and expansion potential than the initial product a customer purchased. Trailing-12-month dollar-based net retention for AI customers was 104%, compared with 120% a year earlier. The prior-year figure benefited from a significant expansion deal with JPMorgan Chase completed in the fourth quarter of fiscal 2025, Smit said. Net retention across all customers was 93%, down from 105%.
Roy said new-logo wins increased 27% during fiscal 2026, while the number of pipeline opportunities valued at $500,000 in ARR or more doubled year over year. Pipeline opportunities in compliance-heavy sectors including banking, financial services, insurance and healthcare rose 40%.
Fourth-Quarter and Full-Year Results
Fourth-quarter revenue totaled $22.2 million, down from $23.2 million a year earlier but above the company’s guidance and Wall Street consensus, according to Smit. The year-over-year decline reflected lower revenue from legacy conversation and analytics customers. AI customer revenue increased 11% in the quarter.
Fourth-quarter GAAP net income was $1.3 million, or $0.05 per diluted share, compared with $30.9 million, or $1.11 per diluted share, a year earlier. Smit noted that the prior-year quarter included an approximately $29 million tax benefit from the release of most of the company’s valuation allowance.
Non-GAAP net income for the quarter was $2.1 million, or $0.08 per share, compared with $2.4 million, or $0.09 per share, in the prior-year period. Adjusted EBITDA was $2.2 million, representing a 10% margin, compared with $4.5 million and a 19% margin a year ago.
- Full-year GAAP net income was $8.9 million, or $0.32 per diluted share, versus $32.3 million, or $1.13 per diluted share, in fiscal 2025.
- Full-year non-GAAP net income increased to $13 million, or $0.47 per diluted share, from $5.7 million, or $0.20 per share.
- Adjusted EBITDA rose to $13.6 million, or a 15% margin, from $8.6 million, or a 10% margin.
- Operating cash flow reached a record $21.2 million, compared with $5.3 million in fiscal 2025.
- Cash and cash equivalents totaled $73.3 million at June 30, 2026, up from $62.9 million a year earlier.
During the fourth quarter, eGain repurchased 1.4 million shares for $10.1 million at an average price of $7.32 per share. For the full year, it repurchased 1.6 million shares for $11.5 million. The company had $9.7 million remaining under its $60 million repurchase authorization at year-end.
Product Developments and Customer Activity
Roy highlighted several product introductions and deployments, including eGain AI Agent IVA, an intelligent voice agent using the same knowledge platform as the company’s digital self-service products; eGain Agentic Studio, a zero-code environment for building multi-step service applications; and the general availability of eGain Evaluator, a tool for continuous evaluation of AI pipelines.
The company also introduced eGain AI Knowledge Suite for Healthcare, which Roy described as a governed knowledge foundation designed for health plans and health systems.
In the fourth quarter, eGain won new customers including a European insurance company seeking to establish a governed knowledge foundation before scaling AI automation, and a global multi-energy operator deploying eGain’s knowledge platform and AI agent in one contact center. Roy said the energy customer plans to expand the deployment following the initial implementation.
The company also added paid pilots with large organizations, including a pharmaceutical company seeking to capture expertise from scientists and specialists, a testing and certification company facing a regulatory deadline, and a gaming technology provider. Roy said early results from the testing and certification pilot showed 95% self-service resolution and 80% user satisfaction.
Fiscal 2027 Outlook and Long-Term Model
For the first quarter of fiscal 2027, eGain forecast AI customer revenue of $13.7 million to $14 million and total revenue of $20.9 million to $21.4 million. It expects GAAP net income of $500,000 to $1 million, or $0.02 to $0.04 per share, and non-GAAP net income of $1.4 million to $2 million, or $0.05 to $0.08 per share.
For the full fiscal year ending June 30, 2027, the company projected AI customer revenue of $59.5 million to $60.5 million, representing approximately 8% to 10% growth, and total revenue of $84.5 million to $86 million. eGain expects AI customer ARR to rise about 20%, while ARR from legacy customers is projected to decline 60%. The company forecast a GAAP net loss of $2 million to $3 million and adjusted EBITDA of $650,000 to $1.4 million.
Smit said eGain expects revenue from profitable legacy customers to decline about 40% during fiscal 2027 and plans to use cash generated from that business to fund AI investments. By fiscal 2030, the company is targeting AI customer ARR and total SaaS ARR of $100 million to $120 million, with AI customers representing approximately all SaaS ARR and about 95% of total revenue.
About eGain (NASDAQ:EGAN)
eGain Incorporated (NASDAQ: EGAN) is a software company specializing in cloud-based customer engagement solutions. Its platform integrates knowledge management, analytics, and artificial intelligence to help organizations streamline customer service across digital channels. By centralizing information and automating routine interactions, eGain aims to improve agent productivity, reduce response times, and deliver consistent customer experiences.
The company’s product suite includes tools for knowledge authoring and delivery, AI-powered chatbots, case management, and predictive analytics.
