EGAIN Corp operating income falls 40% to $1.69M

EGAIN Corp operating income falls 40% to $1.69M

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What caused EGAN’s lower operating cash flow?

How many shares did EGAN repurchase, and at what price?

What are EGAN’s remaining performance obligations?

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Key Terms

What caused EGAN’s lower operating cash flow?

How many shares did EGAN repurchase, and at what price?

What are EGAN’s remaining performance obligations?

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Available on EDGAR 11/13/2026 - 04:29 PM EST Accepted by SEC EDGAR 11/13/2026 - 04:29 PM EST

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Form Type

10-Q

EGAIN Corp (EGAN) reported $21.868 million in revenue for the quarter ended September 30, 2026, down 7% from a year earlier. SaaS revenue was $20.842 million, down 5%, and professional-services revenue was $1.026 million, down 36%. AI-customer revenue rose 7% to $14.364 million and represented 66% of revenue; legacy-customer revenue fell 25% to $7.504 million.

Net income was $1.551 million versus $2.820 million, and diluted EPS was $0.06 versus $0.10. Operating income fell 40% to $1.693 million; operating cash flow was $1.775 million versus $10.432 million, with the decrease driven primarily by the timing of a large federal customer payment and lower net income. Gross margin was 73%, compared with 75%.

Cash and cash equivalents were $71.304 million as of September 30, 2026. EGAN repurchased 644,366 shares for $3.6 million at an average $5.64 per share. Management expects fiscal 2027 revenue and operating income to be below fiscal 2026 levels and said it may incur operating losses in some quarters as legacy revenue declines and sales-and-marketing investment increases. The legacy messaging wind-down is expected to begin in fiscal 2027’s second quarter.

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How the balance works

Moderate pointAI-customer revenue rose 7% to $14.364 million in the quarter.

Moderate pointTotal revenue fell 7% to $21.868 million year over year.
Moderate pointNet income was $1.551 million, versus $2.820 million a year earlier.
Moderate pointOperating income fell 40% to $1.693 million year over year.
Moderate pointOperating cash flow decreased $8.7 million year over year.

At September 30, 2026, 71.2 million dollars of contracted revenue remained unrecognized, with 51.9 million dollars expected within one year.

A Form 10-Q is an unaudited quarterly report; this one covers the quarter ended September 30, 2026 and says approximately $6.0 million remained available under eGain’s repurchase program at that date, but the program does not require further purchases and can be suspended or discontinued.

The filing says repurchased shares are held as treasury stock and intended for later reissue. Remaining performance obligations—contracted revenue not yet recognized, including invoiced amounts whether collected or not and amounts not yet invoiced—totaled $71.2 million at September 30, 2026; eGain expected $51.9 million within one year and $19.3 million beyond one year.

Total revenue: $21.868 million AI-customer revenue: $14.364 million Legacy-customer revenue: $7.504 million +5 more

8 metrics

Total revenue $21.868 million Three months ended September 30, 2026; down 7% year over year.

AI-customer revenue $14.364 million Three months ended September 30, 2026; up 7% and 66% of total revenue.

Legacy-customer revenue $7.504 million Three months ended September 30, 2026; down 25% year over year.

Net income $1.551 million Three months ended September 30, 2026, versus $2.820 million in the prior-year quarter.

Operating income $1.693 million Three months ended September 30, 2026; down 40% year over year.

Operating cash flow $1.775 million Three months ended September 30, 2026, versus $10.432 million in the prior-year quarter.

Cash and cash equivalents $71.304 million As of September 30, 2026.

Remaining performance obligations $71.2 million As of September 30, 2026; $51.9 million expected within one year and $19.3 million beyond one year.

remaining performance obligations, deferred revenue, non-GAAP operating income, anti-dilutive effect, +1 more

5 terms

remaining performance obligations financial

"remaining performance obligations were $71.2 million"

Remaining performance obligations are the work a company still needs to complete for its customers, like finishing a service or delivering a product. It’s important because it shows how much future income the company has coming in from current agreements, giving a clearer picture of its ongoing business.

deferred revenue financial

"Deferred revenue primarily consists of payments received in advance"

Cash a company has already received for goods or services it has promised but not yet delivered; it's recorded as a liability because the company still owes that product, service, or future revenue recognition. For investors, deferred revenue signals upcoming work or deliveries that will convert into reported sales over time and affects short-term obligations, cash flow quality, and how quickly a firm can grow recognized revenue—think of it like prepaid subscriptions or gift cards a business must honor later.

non-GAAP operating income financial

"Non-GAAP operating income is defined as income from operations"

Non-GAAP operating income is a measure of a company's profit from its core business activities, calculated by excluding certain expenses or income that are not part of regular operations. It provides a clearer picture of how well the business is performing by focusing on ongoing operations, helping investors compare companies more consistently and make better-informed decisions.

anti-dilutive effect financial

"not included in the computation of diluted earnings per share due to their anti-dilutive effect"

Rule 10b5-1 plan regulatory

"open market repurchase of common stock may also be made under a Rule 10b5-1 plan"

A Rule 10b5-1 plan is a prearranged, written schedule that lets corporate insiders buy or sell company stock at set times or amounts, even if they later learn material nonpublic information. Think of it like setting an automatic thermostat for trades: it creates a clear record that trades were planned in advance, reducing the risk of insider-trading accusations and helping investors trust that insider transactions are routine rather than based on secret information.

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

Net cash provided by operating activities was $1.775 million, compared with $10.432 million in the prior-year quarter. The $8.7 million decrease was driven primarily by the timing of an annual payment from a large U.S. federal government customer, received in fiscal 2026’s fourth quarter rather than the first quarter as in the prior year, and lower net income.

EGAN repurchased 644,366 shares during the quarter ended September 30, 2026, at an average acquisition cost of $5.64 per share, totaling $3.6 million. The company carries repurchased shares as treasury stock and intends to reissue them at a later date.

Remaining performance obligations were $71.2 million as of September 30, 2026. EGAN expects to recognize $51.9 million as revenue within one year and $19.3 million beyond one year.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2026

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-35314

eGain Corporation

(Exact name of registrant as specified in its charter)


Delaware		77-0466366
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1252 Borregas Avenue, Sunnyvale, CA		94089
(Address of principal executive offices)		(Zip Code)

(408) 636-4500

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	EGAN	The Nasdaq Stock Market, LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):

Yes ☐ No ☒

The number of outstanding shares of the registrant’s common stock, par value $0.001 per share, was 25,221,970 as of November 10, 2026.

Table of Contents

EGAIN CORPORATION

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2026

TABLE OF CONTENTS

		Page

PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	2
	Condensed Consolidated Balance Sheets as of September 30, 2026 and June 30, 2026	2
	Condensed Consolidated Statements of Operations for the Three Months Ended September 30, 2026 and 2025	3
	Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended September 30, 2026 and 2025	4
	Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended September 30, 2026 and 2025	5
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended September 30, 2026 and 2025	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	35
Item 4.	Controls and Procedures	35
PART II.	OTHER INFORMATION	36
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	56
Item 5.	Other Information	56
Item 6.	Exhibits	57
	Signatures	58

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

EGAIN CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value data)

(unaudited)


	September 30,			June 30,
	2026			2026
ASSETS
Current assets:
Cash and cash equivalents	$	71,304		$	73,336
Restricted cash		—			8
Accounts receivable, less provision for credit losses of $12 and $28 as of September 30, 2026 and June 30, 2026, respectively		17,948			24,391
Costs capitalized to obtain revenue contracts, net		662			776
Prepaid expenses		2,267			2,811
Other current assets		672			669
Total current assets		92,853			101,991
Property and equipment, net		790			872
Operating lease right-of-use assets		2,203			2,516
Costs capitalized to obtain revenue contracts, net of current portion		1,036			1,200
Goodwill		13,186			13,186
Other assets, net		27,999			28,230
Total assets	$	138,067		$	147,995

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	1,657		$	2,486
Accrued compensation		5,321			4,610
Accrued liabilities		3,914			4,267
Operating lease liabilities		1,010			1,246
Deferred revenue		38,838			46,478
Total current liabilities		50,740			59,087
Deferred revenue, net of current portion		1,994			2,062
Operating lease liabilities, net of current portion		1,445			1,532
Other long-term liabilities		1,086			1,101
Total liabilities		55,265			63,782
Commitments and contingencies (Note 6)
Stockholders' equity:
Common stock, par value $0.001 per share - authorized: 60,000 shares; issued: 33,939 and 33,932 shares as of September 30, 2026 and June 30, 2026, respectively; outstanding: 25,534 and 26,171 shares as of September 30, 2026 and June 30, 2026, respectively		34			34
Additional paid-in capital		419,545			418,710
Treasury stock, at cost: 8,405 and 7,761 shares of common stock as of September 30, 2026 and June 30, 2026, respectively		(53,959)			(50,322)
Accumulated other comprehensive loss		(1,838)			(1,678)
Accumulated deficit		(280,980)			(282,531)
Total stockholders' equity		82,802			84,213
Total liabilities and stockholders' equity	$	138,067		$	147,995

See accompanying notes to condensed consolidated financial statements

Table of Contents

EGAIN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)


	Three Months Ended
	September 30,
	2026			2025
Revenue:
SaaS	$	20,842		$	21,900
Professional services		1,026			1,608
Total revenue		21,868			23,508
Cost of revenue:
Cost of SaaS		4,648			4,171
Cost of professional services		1,300			1,660
Total cost of revenue		5,948			5,831
Gross profit		15,920			17,677

Operating expenses:
Research and development		7,410			7,315
Sales and marketing		4,774			4,029
General and administrative		2,043			3,500
Total operating expenses		14,227			14,844
Income from operations		1,693			2,833
Interest income		524			462
Other income, net		204			455
Income before income tax provision		2,421			3,750
Income tax provision		(870)			(930)
Net income	$	1,551		$	2,820

Per share information:
Earnings per share:
Basic	$	0.06		$	0.10
Diluted	$	0.06		$	0.10
Weighted-average shares used in computation:
Basic		26,098			26,961
Diluted		26,498			27,525

See accompanying notes to condensed consolidated financial statements.

Table of Contents

EGAIN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)


	Three Months Ended
	September 30,
	2026		2025
Net income	$	1,551	$	2,820
Other comprehensive income, net of taxes:
Foreign currency translation adjustments		(160)		(671)
Total comprehensive income	$	1,391	$	2,149

See accompanying notes to condensed consolidated financial statements.

Table of Contents

EGAIN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(unaudited)


	Three Months Ended September 30, 2026
	Common Stock					Additional Paid-in			Treasury Stock						Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares		Amount			Capital			Shares			Amount			Loss			Deficit			Equity
Balances as of June 30, 2026	26,171		$	34		$	418,710			7,761		$	(50,322)		$	(1,678)		$	(282,531)		$	84,213
Issuance of common stock upon exercise of stock options	7			—			18			—			—			—			—			18
Repurchase of common stock	(644)			—			—			644			(3,637)			—			—			(3,637)
Stock-based compensation	—			—			817			—			—			—			—			817
Foreign currency translation adjustments	—			—			—			—			—			(160)			—			(160)
Net income	—			—			—			—			—			—			1,551			1,551
Balances as of September 30, 2026	25,534		$	34		$	419,545			8,405		$	(53,959)		$	(1,838)		$	(280,980)		$	82,802


	Three Months Ended September 30, 2025
	Common Stock					Additional Paid-in			Treasury Stock						Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares		Amount			Capital			Shares			Amount			Loss			Deficit			Equity
Balances as of June 30, 2025	27,083		$	33		$	411,253			6,154		$	(38,812)		$	(336)		$	(291,407)		$	80,731
Issuance of common stock upon exercise of stock options	62			—			246			—			—			—			—			246
Issuance of common stock warrant for services	—			—			1,350			—			—			—			—			1,350
Repurchase of common stock	(231)			—			—			231			(1,471)			—			—			(1,471)
Stock-based compensation	—			—			523			—			—			—			—			523
Foreign currency translation adjustments	—			—			—			—			—			(671)			—			(671)
Net income	—			—			—			—			—			—			2,820			2,820
Balances as of September 30, 2025	26,914		$	33		$	413,372			6,385		$	(40,283)		$	(1,007)		$	(288,587)		$	83,528

See accompanying notes to condensed consolidated financial statements.

Table of Contents

EGAIN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


		Three Months Ended
		September 30,
		2026			2025
Cash flows from operating activities:
Net income		$	1,551		$	2,820
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of costs capitalized to obtain revenue contracts			320			320
Amortization of right-of-use assets			305			258
Depreciation and amortization			104			88
(Recoveries of) provision for credit losses			(16)			1
Deferred income taxes			203			663
Stock-based compensation			817			523
Issuance of common stock warrant for services			—			1,350
Changes in operating assets and liabilities:
Accounts receivable			6,458			9,207
Costs capitalized to obtain revenue contracts			(41)			(97)
Prepaid expenses			542			1,098
Other current assets			(8)			263
Other non-current assets			34			38
Accounts payable			(829)			(1,606)
Accrued compensation			715			(1,121)
Accrued liabilities			(351)			(178)
Deferred revenue			(7,705)			(2,904)
Operating lease liabilities			(316)			(213)
Other long-term liabilities			(8)			(78)
Net cash provided by operating activities			1,775			10,432

Cash flows from investing activities:
Purchases of property and equipment			(25)			(224)
Net cash used in investing activities			(25)			(224)

Cash flows from financing activities:
Proceeds from exercise of stock options			18			246
Repurchases of common stock			(3,637)			(1,471)
Net cash used in financing activities			(3,619)			(1,225)
Effect of change in exchange rates on cash and cash equivalents			(171)			(991)
Net (decrease) increase in cash, cash equivalents and restricted cash			(2,040)			7,992
Cash, cash equivalents and restricted cash at beginning of period			73,344			62,917
Cash, cash equivalents and restricted cash at end of period		$	71,304		$	70,909

Supplemental cash flow disclosures:
Cash paid for taxes		$	409		$	92

Non-cash items:
Purchases of equipment through trade accounts payable		$	—		$	7

See accompanying notes to condensed consolidated financial statements.

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EGAIN CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Organization and Nature of Business

eGain Corporation provides AI knowledge solutions designed to help enterprises deploy artificial intelligence with greater accuracy, reliability, and governance. Our flagship software-as-a-service (SaaS) offering, the eGain AI Knowledge Hub, unifies content across disparate enterprise systems and enables organizations to transform that content into governed, continuously maintained knowledge that can serve as the instruction layer for AI agents, as well as a source of reliable and consistent information for customers and employees. In October 2026, we introduced AI KnowledgeOps, a set of capabilities designed to help organizations maintain the accuracy, consistency, and reliability of enterprise knowledge across its lifecycle, from identifying knowledge gaps to authoring, verifying and delivering answers. The platform supports digital self-service, contact center operations, employee support, and other knowledge-intensive workflows. It integrates with major customer relationship management and contact center platforms, as well as AI models, enabling customers to automate workflows and deploy AI-powered solutions across their operations. We are headquartered in Sunnyvale, California, USA. We also operate in the United Kingdom and India.

Fiscal Year

The Company’s fiscal year ends on June 30. References to fiscal year 2027 refers to the Company’s fiscal year ending June 30, 2027. References to fiscal year 2026 refers to the Company’s fiscal year ended June 30, 2026.

Basis of Presentation

The accompanying condensed consolidated balance sheet as of September 30, 2026 and the condensed consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for the three months ended September 30, 2026 and 2025, are unaudited. The condensed consolidated balance sheet as of June 30, 2026 was derived from audited consolidated financial statements as of that date but does not include all the information and footnotes required by generally accepted accounting principles (GAAP) for complete financial statements.

Certain information and footnote disclosures, normally included in consolidated financial statements prepared in accordance with GAAP, have been condensed or omitted pursuant to such rules and regulations although we believe that the disclosures made are adequate to make the information not misleading. In our opinion, the unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of our financial position, results of operations, and cash flows for the periods presented.

These condensed consolidated financial statements and notes should be read in conjunction with our audited consolidated financial statements and accompanying notes for the fiscal year ended June 30, 2026, included in our Annual Report on Form 10-K. The results of our operations for the interim periods presented are not necessarily indicative of results that may be expected for any other interim period or for the full fiscal year ending June 30, 2027.

Principles of Consolidation

We prepared the condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and included the accounts of our wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated.

Use of Estimates

The preparation of financial statements requires us to make estimates and assumptions in the condensed consolidated financial statements and accompanying notes. Actual results could differ significantly from estimates. We make estimates

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that we believe to be reasonable based on historical experience and other assumptions. Significant estimates and assumptions made by management include the following:

●

Standalone selling price (SSP) of performance obligations for contracts with multiple performance obligations;

●

Estimate of variable consideration for performance obligations in connection with Topic 606;

●

Period of benefit associated with capitalized costs to obtain revenue contracts;

●

Valuation, measurement and recognition of current and deferred income taxes;

●

Fair value of stock-based awards;

●

Fair value of warrants; and

●

Lease term and incremental borrowing rate for lease liabilities.

Recent Accounting Pronouncements

Pronouncements Recently Adopted

In July 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient for estimating expected credit losses on current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. The practical expedient permits an entity, in developing reasonable and supportable forecasts as part of estimating expected credit losses, to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset. We adopted ASU 2025-05 prospectively on July 1, 2026 and elected the practical expedient. The adoption did not have a material impact on our consolidated financial statements and related disclosures.

Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disaggregated disclosure of income statement expenses for public business entities. The objective of this guidance is to improve the disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) included in each relevant expense caption. This ASU is effective for fiscal years beginning after December 15, 2026 (our fiscal year 2028), and interim reporting periods beginning after December 15, 2027, with early and retrospective adoption permitted. We are currently evaluating the impact of this update on our consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies the scope of Topic 270 and the form and content of interim financial statements, provides a comprehensive list of required interim disclosures, and adds a disclosure principle requiring entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. This ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027 (our fiscal year 2029), with early adoption permitted. We are currently evaluating the impact of this update on our consolidated financial statements and related disclosures.

Revenue Recognition

Revenue Recognition Policy

Our revenue is comprised of two categories consisting of SaaS and professional services. SaaS revenue includes cloud delivery arrangements, term licenses, embedded original equipment manufacturer (OEM) royalties, and associated support. Professional services include consulting, implementation, training, and managed services.

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Significant Judgment Applied in the Determination of Revenue Recognition

We enter into contractual arrangements with customers that may include promises to transfer multiple services, such as subscription, support, and professional services. With respect to our business, a performance obligation is a promise to transfer a service to a customer that is distinct. Significant judgment is required to determine whether services are distinct

performance obligations that should be accounted for separately or combined as one unit of accounting. Additionally, significant judgment is required to determine the timing of revenue recognition.

We allocate the transaction price to each performance obligation based on relative SSP. The SSP is the price at which we would sell a promised service separately to one of our customers. Judgment is required to determine the SSP for each distinct performance obligation.

We determine the SSP by considering our pricing objectives in relation to market demand. Consideration is placed based on our history of discounting prices, size and volume of transactions involved, customer demographics and geographic locations, price lists, contract prices and our market strategy.

Determination of Revenue Recognition

Under Topic 606, we recognize revenue upon the transfer of control of promised services to our customers in the amount that is commensurate with the consideration that we expect to receive in exchange for those services. If consideration includes a variable amount in the arrangement, such as service level credits or contingent fees, then we include an estimate of the amount that we expect to receive for the total transaction price.

The amount of revenue that we recognize is based on (i) identifying the contract with a customer; (ii) identifying the performance obligations in the contract; (iii) determining the transaction price; (iv) allocating the transaction price to the performance obligations in the contract on a relative SSP basis; and (v) recognizing revenue when, or as, we satisfy each performance obligation in the contract typically through delivery or when control is transferred to the customer.

SaaS Revenue

The following customer arrangements are recognized ratably over the contract term as the performance obligations are delivered:

●

Cloud delivery arrangements;

●

Maintenance and support arrangements; and

●

Term licenses which incorporate on-premise software licenses and a subscription to substantial cloud functionalities.

For contracts involving distinct software licenses, the license performance obligation is satisfied at a point in time when control is transferred to the customer.

We typically invoice our customers in advance upon execution of the contract or subsequent renewals with payment terms generally between 30 and 45 days. Invoiced amounts are recorded in accounts receivable, deferred revenue or revenue, depending if control transferred to our customers based on each arrangement.

We have a royalty agreement with a customer related to our embedded intellectual property, under which the customer pays a per-license fee for software and support for each license sold containing our embedded software. These embedded OEM royalties are included in SaaS revenue. As the customer reports its license sales to us a quarter in arrears, we estimate royalties earned in each quarter and adjust for any differences between the estimate and the reported amount in the following quarter, when the customer’s royalty report is received. Upon a review of product development activity, we determined that the embedded software is being maintained but not further developed. Furthermore, the embedded license has limited standalone value and is interdependent with the ongoing support. Beginning in fiscal year 2027, the embedded

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license and support are accounted for as a single performance obligation recognized ratably over the royalty payment term and we no longer recognize a portion of these royalties at a point in time. The impact of this change was not material.

Professional Services Revenue

Professional services revenue includes system implementation, consulting, training, and managed services. The transaction price is allocated to various performance obligations based on their SSP. Revenue allocated to each performance obligation is recognized at the earlier of satisfaction of discrete performance obligations, or as work is performed on a time and material basis. Managed services include a comprehensive set of processes and activities that range from implementation to monitoring the evolution and support of eGain solutions in a company. Our consulting and implementation service contracts are bid either on a time-and-material basis or on a fixed-fee basis. Managed services contracts are bid on a time-and-material basis. Fixed fees are generally paid upon milestone billing or customer acceptance at pre-determined points in the contract. Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue or revenue, depending on whether transfer of control to customers has occurred.

Training revenue that meets the criteria to be accounted for separately is recognized when training is provided.

Contracts with Multiple Performance Obligations

The Company enters into contracts that can include various combinations of subscriptions, professional services and maintenance and support, which are generally distinct and accounted for as separate performance obligations. For contracts with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation on a relative basis using the respective SSP for each performance obligation.

Costs Capitalized to Obtain Revenue Contracts, Net

Under Topic 606, we capitalize incremental costs of obtaining non-cancelable subscription and support revenue contracts. The capitalized amounts consist primarily of sales commissions paid to our direct sales force. Capitalized amounts also include (i) amounts paid to employees other than the direct sales force who earn incentive payouts under annual compensation plans that are tied to the value of contracts acquired and (ii) the associated payroll taxes and fringe benefit costs associated with the payments to our employees, including stock-based compensation.

Costs capitalized related to new revenue contracts are generally deferred and amortized on a straight-line basis over a period of benefit that we estimate to be five years. We determine the period of benefit by taking into consideration the historical and expected durations of our customer contracts, the expected useful lives of our technologies, and other factors. Commissions for renewal contracts relating to our cloud-based arrangements are expensed when incurred, as we do not consider renewal contracts to be commensurate with initial customer contracts. Historically, any commission associated with renewals have been immaterial. Amortization of costs to obtain revenue contracts is included as a component of sales and marketing expenses in our condensed consolidated statements of operations.

During the three months ended September 30, 2026 and 2025, we capitalized $41,000 and $97,000 of costs to obtain revenue contracts, respectively, and amortized $320,000 and $320,000 to sales and marketing expense, respectively.

Capitalized costs to obtain revenue contracts, net were $1.7 million and $2.0 million as of September 30, 2026 and June 30, 2026, respectively, on our condensed consolidated balance sheets.

Deferred Revenue

Deferred revenue primarily consists of payments received in advance of revenue recognition from cloud, term and ratable licenses, and maintenance and support services and is recognized as the revenue recognition criteria are met. We generally invoice customers in annual or quarterly installments. The deferred revenue balance does not represent the total contract value of annual or multi-year, non-cancelable cloud or maintenance and support agreements. Deferred revenue is influenced by several factors, including seasonality, the compounding effects of renewals, invoice duration, invoice timing and new business linearity within the financial reporting period.

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Segment Information

We operate in one segment - the development, license, implementation, and support of AI-powered knowledge management and customer experience automation solutions. Operating segments are identified as components of an enterprise for which discrete financial information is available and regularly reviewed by our Chief Operating Decision-Maker (CODM) in order to make decisions about resources to be allocated to the segment and assess its performance. Our CODMs under ASC 280, Segment Reporting, are our executive management team. Our CODMs review financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance. The CODMs regularly evaluate non-GAAP operating income, which is defined as income from operations as presented on the condensed consolidated statements of operations and adding back warrants and stock-based compensation, along with significant revenue and expense categories aligned with those presented on our condensed consolidated statement of operations, and the accounting policies governing our segment are the same as those described in Note 1, “Summary of Business and Significant Accounting Policies.”

Our revenue is derived from North America and combined Europe, Middle East, and Africa (EMEA) and is disclosed in Note 2. However, we incur operating expenses in the North America, EMEA, and Asia Pacific regions.

The following table presents our income (loss) from operations among our three operating regions (in thousands):


	Three Months Ended
	September 30,
	2026			2025
Income (loss) from operations:
North America	$	217		$	2,023
Europe, Middle East, & Africa		2,937			2,347
Asia Pacific		(1,461)			(1,537)
Income from operations	$	1,693		$	2,833

The following table presents our long-lived assets, corresponding to our geographic areas are as follows (in thousands):


	September 30,			June 30,
	2026			2026
Long-lived assets:
North America	$	444		$	493
Europe, Middle East, & Africa		156			161
Asia Pacific		190			218
Long-lived assets	$	790		$	872

For the purposes of entity-wide geographic area disclosures, long-lived assets consist of computers and equipment, furniture and fixtures, and leasehold improvements, net of accumulated depreciation and amortization. These items are included in property and equipment, net, on the accompanying condensed consolidated balance sheets.

Concentration of Credit Risk and Significant Customers

Our financial instruments that are exposed to concentrations of credit risk include cash and cash equivalents, restricted cash, and accounts receivable. We complement direct sales with resell partnerships based on product connectors into cloud contact center platforms. We also partner with system integrators and managed service providers. One customer accounted for 13% and 15% of total revenue during the three months ended September 30, 2026 and 2025, respectively. Three and two customers accounted for more than 10% of our accounts receivable, less provision for credit losses balance as of September 30, 2026 and 2025, respectively.

Accounts Receivable and Provision for Credit Losses

We extend unsecured credit to customers on a regular basis. Our accounts receivable is derived from revenue earned from customers and are not interest bearing. We also maintain provision for credit losses to reserve for potential uncollectible

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trade receivables. We review our trade receivables by aging category to identify specific customers with known disputes or collectability issues. We exercise judgment when determining the adequacy of these reserves as we evaluate historical bad debt trends, general economic conditions in the U.S. and internationally, and changes in customer financial conditions. If we make different judgments or utilize different estimates, then material differences may result in additional reserves for trade receivables, which would be reflected by charges in general and administrative expenses for any period presented. We write-off receivables after all collection efforts have been exhausted and the amounts are deemed uncollectible.

In certain revenue contracts, contractual billings do not coincide with revenue recognized on the contract. Unbilled accounts receivables are recorded when revenue recognized on the contract exceeds billings, pursuant to contract provisions, and become billable upon certain criteria being met. Unbilled accounts receivables, for which the Company has the unconditional right to consideration, totaled $1.3 million and $1.2 million as of September 30, 2026 and June 30, 2026, respectively, and are included in the accounts receivable, less provision for credit losses balance on the accompanying condensed consolidated balance sheets.

Stock-Based Compensation

We account for stock-based compensation in accordance with Accounting Standards Codification (ASC) 718, Compensation—Stock Compensation (ASC 718). Under the fair value recognition provisions of ASC 718, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, net of expected forfeitures. Stock-based compensation expense consists of expenses for stock options and restricted stock units (RSUs) granted under our Amended and Restated 2005 Stock Incentive Plan, and stock purchase rights granted under our 2017 Employee Stock Purchase Plan (ESPP).

The ESPP provides that eligible employees may purchase the Company’s common stock through payroll deductions at a price equal to 85% of the lower of the fair market value at the entry date of the applicable offering period or at the end of each applicable purchasing period. The offering period, meaning a period with respect to which the right to purchase shares of our common stock may be granted under the ESPP, will not exceed twenty-seven months and consist of a series of six-month purchase periods. Eligible employees may join the ESPP at the beginning of any six-month purchase period. Under the terms of the ESPP, employees can choose to have between 1% and 15% of their base earnings withheld to purchase the Company’s common stock.

Determining the fair value of the stock-based awards at the grant date requires significant judgment and the use of estimates, particularly surrounding Black-Scholes valuation assumptions such as stock price volatility and expected option term.

Below is a summary of stock-based compensation included in the costs and expenses (in thousands):


		Three Months Ended
		September 30,
		2026			2025
Stock-Based Compensation Expense:
Cost of revenue		$	153		$	95
Research and development			385			230
Sales and marketing			171			111
General and administrative			108			87
Total stock-based compensation expense		$	817		$	523

Total stock-based compensation includes expense related to non-employee awards of $3,400 and $2,700 during the three months ended September 30, 2026 and 2025, respectively.

Total stock-based compensation includes expense related to the ESPP of $79,000 and $60,000 for the three months ended September 30, 2026 and 2025, respectively.

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We utilize the Black-Scholes valuation model for estimating the fair value of the stock-based compensation on options granted and ESPP stock purchase rights. We estimate the fair value for stock based RSU awards based on the closing market price on the grant date. All shares of our common stock issued pursuant to our stock option, RSUs, and ESPP plans are only issued out of an authorized reserve of shares of common stock, which were previously registered with the SEC on Registration Statements on Form S-8.

During the three months ended September 30, 2026 and 2025, we granted options to purchase 81,000 and 115,700 shares of common stock with a weighted-average grant date fair value of $3.28 and $3.65 per share, respectively.

We used the following weighted-average assumptions as inputs into the Black-Scholes valuation model to estimate the fair value of the options granted:


		Three Months Ended
		September 30,
		2026		2025
Expected volatility		55	%	51	%
Average risk-free interest rate		4.50	%	3.80	%
Expected life (in years)		4.55		4.52
Dividend yield		—		—

The dividend yield of zero is based on the fact that we have never paid cash dividends and have no present intention to pay cash dividends. We determined the appropriate measure of expected volatility by reviewing historic volatility in the share price of our common stock, as adjusted for certain events that management deemed to be non-recurring and non-indicative of future events. The risk-free interest rate is derived from the average U.S. Treasury Strips rate with maturities approximating the expected lives of the awards during the period, which approximate the rate in effect at the time of the grant.

On June 1, 2026 and 2025, employees were granted the right to purchase an aggregate of 64,992 and 82,635 shares under the ESPP, respectively. During each of the three months ended September 30, 2026 and 2025, no ESPP grants or purchases occurred.

As of September 30, 2026, there were 445,865 shares of common stock available for issuance under the ESPP.

We base our estimate of expected life of a stock option on the historical exercise behavior and cancellations of all past option grants made by the Company during the time period which its common stock has been publicly traded, the contractual term of the option, the vesting period and the expected remaining term of the outstanding options.

In accordance with ASU 2016-09, Compensation—Stock Compensation: Improvements to Employee Share-Based Accounting, we elected to continue to estimate forfeitures in the calculation of stock-based compensation expense.

As of September 30, 2026, there was approximately $1.6 million of total unrecognized compensation cost, net of expected forfeitures, related to unvested stock options, which is expected to be recognized over the weighted-average period of 1.5 years. There were 6,520 and 62,106 options exercised during the three months ended September 30, 2026 and 2025, respectively.

As of September 30, 2026, there was approximately $176,000 of total unrecognized compensation cost, net of expected forfeitures, related to unvested RSUs, which is expected to be recognized over the weighted-average period of 0.1 years. There were no RSUs granted during the three months ended September 30, 2026 and 2025.

As of September 30, 2026, there was approximately $54,000 of total unrecognized compensation cost, net of expected forfeitures, related to ESPP purchase rights, which is expected to be recognized over the weighted-average period of 0.17 years.

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Warrants

We account for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC Topic 480, Distinguishing Liabilities from Equity (ASC 480), and ASC Topic 815, Derivatives and Hedging (ASC 815). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC Topic 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC Topic 815, including whether the warrants are indexed to our own common stock and whether the warrant holders require mandatory cash settlement, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance.

For warrants that meet all of the criteria for equity classification, the warrants are recorded as a component of additional paid-in capital at the time of issuance. The grant date fair value of the warrants were estimated using a Black-Scholes valuation model.

Leases

Lease agreements are evaluated to determine whether an arrangement is or contains a lease in accordance with ASC 842, Leases.

Operating leases are included in operating lease right-of-use (ROU) assets, current operating lease liabilities, and noncurrent operating lease liabilities in the condensed consolidated financial statements. ROU assets represent the Company’s right to use leased assets over the agreed upon term. Lease liabilities represent the Company’s contractual obligation to make lease payments over the lease term.

For operating leases, ROU assets and lease liabilities are recognized at the commencement date of the lease. The lease liability is measured as the present value of the lease payments over the lease term, using the rate implicit in the lease if readily determinable. If the rate implicit in the lease cannot be readily determined, the Company uses its incremental borrowing rate at lease commencement. The operating lease ROU assets are calculated as the present value of the remaining lease payments plus unamortized initial direct costs and any prepayments, less unamortized lease incentives received.

Operating leases typically include non-lease components such as common-area maintenance costs. We have elected to include non-lease components with lease payments for the purpose of calculating lease ROU assets and liabilities, to the extent that they are fixed. Non-lease component payments that are not fixed are expensed as incurred as variable lease payments.

Lease terms may include renewal or extension options to the extent they are reasonably certain to be exercised. The assessment of whether renewal or extension options are reasonably certain to be exercised is made at lease commencement. Factors considered in determining whether an option is reasonably certain of exercise include, but are not limited to, the value of any leasehold improvements, the value of renewal rates compared to market rates, and the presence of factors that would cause a significant economic penalty to the Company if the option were not exercised. Lease expense is recognized on a straight-line basis over the lease term. The Company has elected not to recognize ROU assets and obligations for leases with an initial term of twelve months or less, and has applied a capitalization threshold to recognize a lease on the condensed consolidated balance sheet. The expense associated with short-term leases and leases that do not meet the Company’s capitalization threshold are recorded to lease expense in the period it is incurred.

Goodwill

We review goodwill annually for impairment or sooner whenever events or changes in circumstances indicate that it may be impaired. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit. We operate under a single reporting unit and accordingly, all of our goodwill is associated with the entire company. We had no indicators of impairment during the three months ended September 30, 2026.

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2. REVENUE RECOGNITION

Disaggregation of Revenue

The following table presents our revenue recognized over-time and at a point-in-time during the three months ended September 30, 2026 and 2025, respectively (in thousands):


	Three Months Ended September 30,
	2026		2025
Revenue:
Over-time	$	21,323	$	21,845
Point-in-time		545		1,663
Total revenue	$	21,868	$	23,508

The following table presents our revenue by geography. Revenue by geography is generally determined on the region of our contracting entity rather than the region of our customer. The relative proportion of our total revenue between each geographic region as presented in the table below was materially consistent across each of our operating regions’ revenue for the periods presented (in thousands):


		Three Months Ended
		September 30,
	2026				2025
Revenue:
North America	$	17,352		$	18,962
Europe, Middle East, & Africa		4,516			4,546
Total revenue	$	21,868		$	23,508

Contract Balances

Contract assets, if any, consist of unbilled receivables for completed performance obligations which have not been invoiced, and for which we do not have an unconditional right to consideration. Unbilled receivables are included in accounts receivable, less provision for credit losses on our condensed consolidated balance sheets. Contract liabilities consist of deferred revenue for which we have an obligation to transfer services to customers and have received consideration in advance or the amount is due from customers. Once the obligations are fulfilled, then deferred revenue is recognized to revenue in the respective period.

The following table presents our contract liabilities (in thousands):


	Balance as of		Balance as of
	September 30, 2026		June 30, 2026
Contract liabilities:
Deferred revenue	$	38,838	$	46,478
Deferred revenue, net of current portion		1,994		2,062
Total deferred revenue	$	40,832	$	48,540

$18.8 million of deferred revenue as of June 30, 2026 was recognized as revenue during the three months ended September 30, 2026.

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Remaining Performance Obligations

Remaining performance obligations represent contracted revenue that had not yet been recognized, and include billed deferred revenue, consisting of amounts invoiced to customers whether collected or uncollected which have not been recognized as revenue, as well as unbilled amounts that will be invoiced and recognized as revenue in future periods. The transaction price allocated to the remaining performance obligation is influenced by a variety of factors, including seasonality, timing of renewals, average contract terms and foreign currency exchange rates. As of September 30, 2026, our remaining performance obligations were $71.2 million, of which we expect to recognize $51.9 million and $19.3 million as revenue within one year and beyond one year, respectively.

3. EARNINGS PER SHARE

Basic earnings per share is computed using the weighted-average number of shares of common stock outstanding. In periods where net income is reported, the weighted-average number of shares is increased by stock options in the money, shares issuable for RSUs subject to service-based vesting requirements, and in the money warrants to calculate diluted earnings per share.

The following table represents the calculation of basic and diluted earnings per share (unaudited, in thousands, except per share data):


	Three Months Ended
	September 30,
	2026		2025
Net income	$	1,551	$	2,820
Per share information:
Earnings per share:
Basic	$	0.06	$	0.10
Diluted	$	0.06	$	0.10
Weighted-average shares used in computation:
Basic		26,098		26,961
Effect of dilutive options and RSUs		400		564
Diluted		26,498		27,525

Weighted-average stock options to purchase 2,916,117 and 2,861,639 shares of common stock for the three months ended September 30, 2026 and 2025, respectively, and warrants to purchase 500,000 shares of common stock in each reporting period, were not included in the computation of diluted earnings per share due to their anti-dilutive effect. Such securities could have a dilutive effect in future periods.

No RSUs were excluded due to their anti-dilutive effect during the three months ended September 30, 2026 and 2025. Shares issuable under the ESPP were not included in the computation of diluted earnings per share for the three months ended September 30, 2026 and 2025 as their effect was not material.

4. INCOME TAXES

Income taxes are accounted for using the asset and liability method in accordance with ASC 740, Income Taxes (ASC 740). Under this method, deferred tax liabilities and assets are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. For the legacy eGain business in the United States, based upon the weight of available evidence, which includes our historical operating performance, our future investment plans, and the uncertainty in the current market and economic environment, we have determined that it is more likely than not that we will be able to utilize the deferred tax assets and as such, do not have a valuation allowance against our net deferred tax assets except for the California net operating losses and research and development credits. For the legacy eGain business in the United Kingdom, based on

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the positive evidence, the Company has determined it would be able to utilize the deferred tax assets and does not have a valuation allowance against the deferred tax assets. The remaining eGain foreign operations, including its wholly-owned subsidiary Exony Limited, have historically been profitable and we believe it is more likely than not that those assets will be realized. Our tax provision primarily relates to foreign activities as well as federal and state income taxes. Our income tax rate differs from the statutory tax rates primarily due to stock-based compensation, research and development tax credits, and our foreign operations.

We account for uncertain tax positions according to the provisions of ASC 740. ASC 740 contains a two-step approach for recognizing and measuring uncertain tax positions. Tax positions are evaluated for recognition by determining if the weight of available evidence indicates that it is probable that the position will be sustained on audit, including resolution of related appeals or litigation. Tax benefits are then measured as the largest amount which is more than 50% likely of being realized upon ultimate settlement. We consider many factors when evaluating and estimating tax positions and tax benefits, which may require periodic adjustments and which may not accurately anticipate actual outcomes.

As of September 30, 2026, utilization of the net operating loss (NOL) or tax credit carryforwards to offset future taxable income and taxes, respectively, are subject to an annual limitation under the Internal Revenue Code of 1986 and similar state provisions, which is determined by first multiplying the value of the Company’s stock at the time of the ownership change by the applicable long-term, tax-exempt rate, and then could be subject to additional adjustments such as built in gain or built in loss, as required. Any limitation may result in expiration of all or a portion of its NOL and or tax credit carryforwards before utilization. The Company has not identified a change in ownership as of September 30, 2026 that would significantly limit the NOL carryovers.

5. LEASES

We lease our office facilities under non-cancelable operating leases that expire on various dates through the fiscal year 2033. All of our office leases are classified as operating leases with lease expense recognized on a straight-line basis over the lease term. Lease ROU assets and liabilities are recognized on the commencement date at the present value of lease payments over the lease term. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on information available at the commencement date to determine the present value of lease payments.

Total operating lease costs were $360,000 and $332,000 for the three months ended September 30, 2026 and 2025, respectively. Operating lease amounts above do not include sublease income. The Company recognized sublease income of $17,000 and $0 for the three months ended September 30, 2026 and 2025, respectively.

For the three months ended September 30, 2026 and 2025, operating cash outflows for operating leases were $371,000 and $287,000, respectively.

The following tables present information about leases on our condensed consolidated balance sheets (in thousands):


	September 30, 2026		June 30, 2026
Assets:
Operating lease right-of-use assets	$	2,203	$	2,516
Liabilities:
Operating lease liabilities	$	1,010	$	1,246
Operating lease liabilities, net of current portion	$	1,445	$	1,532

The following table presents information about the weighted average lease term and discount rate as follows:


	September 30, 2026		June 30, 2026
Weighted average remaining lease term (in years)	4.93		4.78
Weighted average discount rate	8.46	%	8.19	%

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As of September 30, 2026, remaining maturities of lease liabilities are as follows (in thousands):


Fiscal Period:
Remaining nine months of fiscal year 2027	$	887
Fiscal year 2028		521
Fiscal year 2029		389
Fiscal year 2030		291
Fiscal year 2031		291
Fiscal year 2032 and thereafter		728
Total minimum lease payments		3,107
Less: Imputed interest		(652)
Total operating lease liabilities		2,455
Less: Current operating lease liabilities		(1,010)
Total operating lease liabilities, net of current portion	$	1,445

6. COMMITMENTS AND CONTINGENCIES

Litigation

In the ordinary course of business, we are involved in various legal proceedings and claims related to alleged infringement of intellectual property rights, commercial, corporate and securities, labor and employment, wage and hour, and other claims that are not expected to have a material impact on our business or our condensed consolidated financial statements. We have been, and may in the future be, put on notice and/or sued by third parties for alleged infringement of their proprietary rights, including patent infringement.

We evaluate all claims and lawsuits with respect to their potential merits, our potential defenses and counterclaims, settlement or litigation potential and the expected effect on us. Our technologies may be subject to injunction if they are found to infringe the rights of a third party. In addition, our agreements require us to indemnify our customers for third-party intellectual property infringement claims, which could increase the cost to us of an adverse ruling on such a claim.

Warranty

We generally warrant that the program portion of our software will perform substantially in accordance with certain specifications for a period up to one year from the date of delivery. Our liability for a breach of this warranty is either a return of the license fee or providing a fix, patch, work-around or replacement of the software.

We also provide standard warranties against and indemnification for the potential infringement of third-party intellectual property rights to our customers relating to the use of our products, as well as indemnification agreements with certain officers and employees under which we may be required to indemnify such persons for liabilities arising out of their duties to us. The terms of such obligations vary. Generally, the maximum obligation is the amount permitted by law. Historically, cost related to these warranties have not been significant. However, we cannot guarantee that a warranty reserve will not become necessary in the future.

Indemnification

We have agreed to indemnify our directors and executive officers for costs associated with any fees, expenses, judgments, fines and settlement amounts incurred by any of these persons in any action or proceeding to which any of those persons is, or is threatened to be, made a party by reason of the person’s service as a director or officer, including any action by us, arising out of that person’s services as our director or officer or that person’s services provided to any other company or enterprise at our request.

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Transfer Pricing

We have received transfer-pricing assessments from tax authorities with regard to transfer pricing issues for certain fiscal years, which we have appealed with the appropriate authority. We review the status of each significant matter and assess its potential financial exposure. We believe that such assessments are without merit and would not have a significant impact on our condensed consolidated financial statements.

Contractual Commitments

Our principal contractual commitments consist of obligations under leases for office space. Lease agreements are evaluated to determine whether an arrangement is or contains a lease in accordance with ASC 842, Leases.

7. FAIR VALUE MEASUREMENT

ASC 820, Fair Value Measurement (ASC 820), defines fair value, establishes a framework for measuring fair value of assets and liabilities, and expands disclosures about fair value measurements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the assets or liabilities in an orderly transaction between market participants on the measurement date. Subsequent changes in fair value of these financial assets and liabilities are recognized in earnings or other comprehensive income when they occur. ASC 820 applies whenever other statements require or permit assets or liabilities to be measured at fair value.

ASC 820 includes a fair value hierarchy, of which the first two are considered observable and the last unobservable, that is intended to increase the consistency and comparability in fair value measurements and related disclosures. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon their own market assumptions.

The fair value hierarchy consists of the following three levels:

Level 1 – instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets.

Level 2 – instrument valuations are obtained from readily-available pricing sources for comparable instruments.

Level 3 – instrument valuations are obtained without observable market value and require a high level of judgment to determine the fair value.

Our money market funds are measured at fair value on a recurring basis based on quoted market prices in active markets and are classified as level 1 within the fair value hierarchy. As of September 30, 2026 and June 30, 2026, cash equivalents classified as level 1 instruments, including money market account investments, were measured at $49.3 million and $45.2 million, respectively.

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8. SHARE REPURCHASE PROGRAM

On November 14, 2022, our Board of Directors authorized a stock repurchase program under which the Company may purchase up to $20 million of its own outstanding common stock. In May 2024 and again in September 2025, the Board of Directors approved a $20 million increase in the stock repurchase program, bringing the aggregate amount eGain may purchase thereunder from $20 million to $60 million of its outstanding common stock. As of September 30, 2026, approximately $6.0 million, including associated trading fees and estimated taxes, remained available for stock repurchases pursuant to our stock repurchase program.

Under the stock repurchase program, we may purchase shares of common stock on a discretionary basis from time to time through open market transactions or privately negotiated transactions at prices deemed appropriate by us. In addition, at the discretion of eGain, open market repurchase of common stock may also be made under a Rule 10b5-1 plan, which would permit common stock to be repurchased when the Company might otherwise be precluded from doing so under its insider trading laws or self-imposed trading restrictions.

The timing and number of shares repurchased will be determined based on an evaluation of market conditions and other factors, including stock price, trading volume, general business and market conditions, and the availability of capital. On September 3, 2025, the Board of Directors also approved an extension of the stock repurchase program until the earlier of (i) the date the aggregate amount of shares that can be repurchased under the stock repurchase program has been repurchased and (ii) the date the Board of Directors decides to terminate the stock repurchase program. The stock repurchase program does not obligate us to acquire a specified number of shares and may be modified, suspended, or discontinued at any time at our discretion without notice. The stock repurchase program will be funded using existing cash or future cash flows. 644,366 shares have been repurchased for an average acquisition cost per share of $5.64, totaling $3.6 million during the three months ended September 30, 2026. We intend to reissue repurchased shares at a later date and therefore carry the shares as treasury stock, at cost.

9. WARRANTS

On August 14, 2025, the Company issued a warrant (Warrant) to JPMC Strategic Investments I Corporation (JPMC) to acquire 500,000 shares of the Company’s common stock at an exercise price of $7.10 per share. The Warrant was issued without cash consideration and is exercisable through the fifth anniversary of issuance. The offer and issuance of the Warrant is expected to be exempt from registration under the Securities Act of 1933 (Securities Act), pursuant to Section 4(a)(2) of the Securities Act. JPMC has represented to the Company that it is an “accredited investor” as defined in Regulation D and that the Warrant is being acquired for investment purposes and not with a view to, or for sale in connection with, any distribution thereof.

The Warrant was first evaluated under ASC 480, and determined that it does not meet the criteria for a liability classification. The Warrant was then evaluated under ASC 815-40, and determined to be an equity-classified instrument. Accordingly, the fair value of the warrant at grant date was recognized in additional paid-in capital within stockholders’ equity.

The grant-date fair value of the Warrant was estimated at $2.70 per warrant using the Black-Scholes valuation model with the following assumptions: expected volatility of 54%, risk-free interest rate of 2.87%, expected term of 5 years, and no expected dividends. The total fair value of the Warrant was $1.35 million and was recognized as a non-cash general and administrative expense during the three months ended September 30, 2025. No Warrant related expense was recognized during the three months ended September 30, 2026.

No warrants were exercised or expired during the three months ended September 30, 2026.

10. SUBSEQUENT EVENTS

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the condensed consolidated financial statements were issued. The Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed consolidated financial statements.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and the related notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q, and with our audited financial statements and the related notes included in our Annual Report on Form 10-K for the year ended June 30, 2026.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to future periods, future events or our future operating or financial plans or performance. Often, these statements include the words “believe,” “expect,” “target,” “anticipate,” “intend,” “plan,” “seek,” “estimate,” “potential,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” or “may,” or the negative of these terms, and other similar expressions. These forward-looking statements that involve risks and uncertainties include statements as to:

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our belief that it is useful to exclude certain non-cash charges and non-core operational charges from non-GAAP operating income;

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expected benefits of our solutions;

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our value proposition;

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our market opportunities;

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customer and market expectations in the market in which we operate, and our ability to meet expectations and satisfy such needs;

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our lengthy sales cycles and the difficulty in predicting timing of sales or delays;

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our expectations with respect to revenue, cost of revenue, expenses and other financial metrics;

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our transition toward AI customers, our expectations regarding artificial intelligence (AI) customer revenue and the composition of our revenue, and the expected decline in revenue from legacy customers, including the planned wind-down of certain legacy offerings;

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our expectation that sales and marketing investment will increase and the expected effect of that investment on our operating results;

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our long-term financial targets;

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our belief that customer service, including contact centers, offers a significant opportunity within any business operation to automate using AI, and that trusted, governed knowledge is foundational to the effective use of AI;

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our business plans, strategies, targets, goals and outlook;

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changes in technology, including AI technology and services;

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our expectations related to our product development plan;

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competition in the markets in which we do business and our competitive advantages;

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our beliefs regarding our prospects for our business;

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changes in demand for our solutions;

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our expectations regarding the composition of our customers;

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our reliance on strategic and third-party distribution partnerships;

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the risk of unauthorized access to a customer’s data or our data or our IT systems and cybersecurity attacks;

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our ability to timely adapt and comply with changing European regulatory and political environments;

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the effect of changes in U.S. tax legislation;

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the effect of compliance with privacy laws and regulations on our business and our customers;

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the effect of changes to trade policies;

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our ability to take adequate precautions against claims or lawsuits made by third parties, including alleged infringement of proprietary rights;

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the adequacy of our capital resources and our ability to raise additional financing;

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the risks related to our international operations;

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the potential impact of foreign currency fluctuations and inflation; and

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the potential impact of health epidemics.

These forward-looking statements reflect our current views with respect to future events, are based on assumptions and are subject to risks and uncertainties. These risks and uncertainties could cause actual results to differ materially from those projected and include, but are not limited to:

●

our ability to successfully execute our business plans, strategies, targets, and outlooks and achieve any business-related forecasts or projections;

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our ability to improve our current solutions and develop new products and services that meet evolving customer needs and market demands;

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our ability to innovate and respond to rapid technological change, including advances in AI technologies, models and platforms and competitive challenges;

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our ability to execute our sales and marketing strategy;

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customer acceptance of our existing and future solutions;

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our ability to predict subscription renewals and maintain customer retention and recurring revenue;

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our ability to grow revenue from AI customers at a rate sufficient to offset declines in revenue from legacy customers, including the risk that AI revenue growth may be slower than anticipated or legacy revenue declines may occur more rapidly than expected;

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our ability to migrate legacy customers to our current AI-enabled platform and manage the transition or planned discontinuation of certain legacy offerings without materially adversely affecting customer relationships, revenue, or operating results;

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market acceptance of AI knowledge solutions as a foundation for enterprise AI;

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our ability to achieve our long-term financial targets, including the impact of changes in revenue growth, customer adoption, operating expenses, and investment requirements;

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risks associated with AI technologies, including inaccurate or unreliable outputs, data privacy and security concerns, evolving legal and regulatory requirements, and potential liability arising from the use of AI-enabled solutions;

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the impact of new legislation or regulations on our business, including laws and regulations governing AI, data privacy, cybersecurity, and cross-border data transfers;

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the impact of accounting pronouncements and our critical accounting policies, judgments, estimates, models and assumptions on our financial results;

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our ability to compete effectively in rapidly evolving markets, including against established technology providers and emerging AI-focused competitors;

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the success of our strategic and distribution partnerships and our reliance on third-party technology providers, including cloud infrastructure and AI model providers;

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our ability to obtain capital when needed;

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our ability to manage future growth;

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our ability to retain key personnel and hire additional personnel;

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risks related to protection of our intellectual property and potential intellectual property infringement claims arising from AI technologies or AI-generated content;

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cybersecurity incidents, unauthorized access to our systems or customer data, service disruptions, and other information security risks;

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foreign currency fluctuations and inflation;

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the global economic environment, including trade policies and tariffs and geopolitical uncertainties;

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risks related to public health pandemics; and

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the risks set forth under “Risk Factors.”

Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by federal securities laws, we undertake no obligation to update any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

All references to “eGain”, the “Company”, “our”, “we” or “us” mean eGain Corporation and its subsidiaries, except where it is clear from the context that such terms mean only eGain and exclude its subsidiaries.

eGain and eGain® are trademarks of eGain Corporation. We also refer to trademarks of other corporations and organizations in this report.

Summary Risk Factors

Our business is subject to numerous risks and uncertainties that could affect our ability to successfully implement our business strategy and affect our financial results. You should carefully consider all of the information in this report and, in particular, the following principal risks and all of the other specific factors described in Item 1A. of this report, “Risk Factors,” before deciding whether to invest in our company.

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If we are unable to grow AI customer revenue sufficiently to offset declining legacy customer revenue, our business and operating results could be adversely affected.

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We may not achieve our announced long-term financial targets, which are based on assumptions that may prove inaccurate.

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Our business is influenced by a range of factors that are beyond our control and that we have no comparative advantage in forecasting.

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Our revenue and operating results have fluctuated in the past and are likely to fluctuate in the future, and because we recognize revenue from subscriptions over a period of time, downturns in revenue may not be immediately reflected in our operating results.

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Our SaaS business model is subject to certain risks.

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We cannot accurately predict subscription renewal rates and the impact these rates may have on our future revenue and operating results.

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Our lengthy sales cycles and the difficulty in predicting timing of sales or delays may impair our operating results.

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Because we depend on a relatively small number of customers for a substantial portion of our revenue, the loss of any of these customers or our failure to attract new significant customers could adversely impact our revenue and harm our business.

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The markets for AI knowledge solutions and customer engagement software, including generative and agentic AI offerings, are competitive and rapidly evolving, and our business will be adversely affected if we are unable to successfully compete with existing competitors and emerging AI technology providers.

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If we fail to expand and improve our sales performance and marketing activities, or retain our sales and marketing personnel, or if our increased investment in sales and marketing does not generate the expected return, we may be unable to grow our business, which could negatively impact our operating results and financial condition.

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Our failure to maintain, develop, or expand strategic and third-party distribution channels would impede our revenue growth.

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Difficulties and delays in customers implementing our products could harm our revenue and margins.

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We conduct a significant portion of our business and operations outside of the U.S., which exposes us to additional risks that may not exist in the U.S. These risks in turn could cause our operating results and financial condition to suffer.

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Unplanned system interruptions, delays in service or inability to increase capacity, including internationally, at our third-party data center facilities or third-party providers could impair the use or functionality of our cloud operations and harm our business.

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Software errors could be costly and time-consuming for us to correct, and could harm our reputation and impair our ability to sell our solutions.

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The terms we agree to in our Service Level Agreements or other contracts may result in increased costs or liabilities, which would in turn affect our results of operations.

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If we are unable to increase the profitability of SaaS revenue, if we experience significant customer attrition, or if we are required to delay recognition of revenue, our operating results could be adversely affected.

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We depend on broad market acceptance of AI knowledge solutions, our applications and our business model. If our expectations regarding the market for our applications are not met, our business could be seriously harmed.

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We may be unable to respond to the rapid technological change, including advances in AI, and changing customer preferences in digital customer engagement, marketing, and service and this may cause our business to suffer.

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We employ third-party technologies for use in or with our platform and the inability to license such technologies on commercially reasonable terms or the inability to maintain these licenses or errors in the software we license could result in increased costs, or reduced service levels, which could adversely affect our business. Our increasing reliance on third-party AI technologies and model providers may also expose us to additional operational, financial, and contractual risks.

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Our offshore product development, support and professional services may prove difficult to manage or may not allow us to realize our cost reduction goals, produce effective new solutions and provide professional services to drive growth.

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If our cybersecurity systems or the systems of our vendors, partners and suppliers are breached and unauthorized access is obtained to a customer’s data, our data or IT systems, or if we experience material cybersecurity incidents, our service may be perceived as not being secure, customers may curtail or stop using our service and we may incur significant legal and financial exposure and liabilities.

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Changes in privacy and data protection laws and regulations, including in the European Union (such as the GDPR), the United Kingdom, and other jurisdictions in which we operate, could expose us to risks of noncompliance and costs associated with compliance.

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Privacy concerns and laws, evolving regulation of cloud computing, AI and other domestic or foreign regulations may limit the use, functionality and adoption of our solutions and adversely affect our business, including by increasing compliance costs or restricting certain AI-enabled functionalities.

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Changes in domestic and foreign trade policies, including the imposition of tariffs and retaliatory tariffs, and other factors beyond our control may adversely impact our business, financial condition, and results of operations.

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Geopolitical instability, including the military conflict involving Iran and broader escalation in the Middle East, could adversely affect our business, financial condition, and results of operations.

Overview

In July 2026, Gartner named eGain a Leader in the first-ever Magic Quadrant for Customer Service Knowledge Management Systems, positioned highest for Ability to Execute and furthest for Completeness of Vision. We believe the publication of this first Magic Quadrant reflects growing recognition by enterprise buyers of knowledge for AI-enabled customer service as a distinct software category. Our solutions are used by Global 2000 companies and government organizations, primarily in North America and Europe, including customers in regulated industries such as financial services, insurance, healthcare, telecommunications, and the public sector.

Business Transition

We are transitioning our business toward customers on our current AI-enabled platform, which we refer to as AI customers, and away from legacy customers on earlier versions of our products, including our Cisco OEM relationship. Beginning in the fourth quarter of fiscal year 2026, we manage and evaluate our business on this customer-level basis rather than by product, because AI capabilities are embedded across our current platform rather than sold as separate products. For the three months ended September 30, 2026, revenue from AI customers increased 7% and represented 66% of total revenue, compared to 57% in the same period in fiscal year 2026, while revenue from legacy customers decreased 25%.

We expect revenue from legacy customers to continue to decline, including as a result of the planned wind-down of our legacy messaging business beginning in the second quarter of fiscal year 2027, and we expect total revenue to decline in fiscal year 2027 compared to fiscal year 2026, as the anticipated decline in legacy customer revenue is expected to exceed the growth in AI customer revenue. Over time, we expect AI customer revenue to represent an increasing share of total revenue. At the same time, we are increasing our investment in sales and marketing to convert increased market awareness into pipeline, new AI customers and expansion within our installed base, which we expect to adversely affect our operating margins in the near term. There can be no assurance that growth in AI customer revenue will offset the decline in legacy revenue within the timeframe we expect, or at all. See “Risk Factors” in Part II, Item 1A.

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Key Financial Measures

We monitor the key financial performance measures set forth below as well as cash and cash equivalents and available debt capacity, which are discussed in “Liquidity and Capital Resources,” to help us evaluate trends, establish budgets, measure the effectiveness of our sales and marketing efforts and assess operational effectiveness and efficiencies.

Revenue

We believe total revenue is a useful measure to evaluate the performance of our business. SaaS revenue is defined as revenue from cloud delivery arrangements, term licenses, embedded OEM royalties, and associated support. Professional services revenue includes system implementation, consulting, training, and managed services. We also monitor revenue from AI customers and legacy customers, as described under “Revenue by Customer Level” below, to evaluate the progress of our business transition and assess the relative contributions of these customer groups to our overall revenue performance.

The following table presents total revenue for each of the following periods:


		Three Months Ended
		September 30,
(in thousands)		2026		2025		Change
SaaS revenue		$	20,842	$	21,900	$	(1,058)	(5)	%
Professional services revenue			1,026		1,608		(582)	(36)	%
Total revenue		$	21,868	$	23,508	$	(1,640)	(7)	%

Non-GAAP Operating Income

Non-GAAP operating income is defined as income from operations, adjusted for the impact of warrants and stock-based compensation expense.

Management believes that it is useful to exclude certain non-cash charges and non-core operational charges from non-GAAP operating income because (i) the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations; and (ii) such expenses can vary significantly between periods as a result of the timing of new stock-based awards. The presentation of the non-GAAP financial measures is not intended to be considered in isolation, or as a substitute for, or superior to, the financial information prepared and presented in accordance with generally accepted accounting principles in the United States of America (GAAP).

The following table presents a reconciliation of GAAP income (loss) from operations to non-GAAP income from operations for each of the following periods:


	Three Months Ended
	September 30,
	2026			2025
Income from operations	$	1,693		$	2,833
Add:
Issuance of common stock warrant for services		—			1,350
Stock-based compensation		817			523
Non-GAAP income from operations	$	2,510		$	4,706

Critical Accounting Policies and Estimates

Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.

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We believe that the assumptions and estimates, which are described in Note 1 “Summary of Business and Significant Accounting Policies” to our condensed consolidated financial statements, associated with revenue recognition, stock-based compensation, provision for credit losses, the valuation of goodwill, the valuation of deferred tax allowance, and legal contingencies have the greatest potential impact on our condensed consolidated financial statements. We evaluate these estimates on an ongoing basis. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Sources of Revenue

Our revenue is comprised of two categories including SaaS and professional services. SaaS revenue includes cloud delivery arrangements, term licenses, embedded OEM royalties, and associated support. Professional services include consulting, implementation, training, and managed services.

SaaS Revenue

For our cloud delivery arrangements, our maintenance and support arrangements and our term license subscriptions that incorporate substantial cloud functionality, the combined performance obligation is recognized ratably over the contract term as the obligation is delivered. For contracts involving distinct software licenses, the license performance obligation is satisfied at a point in time when control is transferred to the customer.

We typically invoice our customers in advance upon execution of the contract or subsequent renewals. Invoiced amounts are recorded in accounts receivable, deferred revenue or revenue, depending on when control is transferred to our customers based on each arrangement.

Embedded OEM royalties are recognized as described in Note 1.

Professional Services Revenue

Professional services revenue includes system implementation, consulting, training, and managed services. The transaction price is allocated to various performance obligations based on their SSP. Revenue allocated to each performance obligation is recognized as work is performed. Managed services include a comprehensive set of processes and activities that range from implementation to monitoring the evolution and support of our solutions in a company. Our consulting and implementation service contracts are bid either on a time-and-material basis or on a fixed-fee basis. Managed services contracts are bid on a time-and-material basis. Fixed fees are generally paid on milestone billing at pre-determined points in the contract. Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue or revenue, depending on whether transfer of control to customers has occurred.

Training revenue that meets the criteria to be accounted for separately is recognized when training is provided.

Remaining Performance Obligations

As of September 30, 2026, our remaining performance obligations were $71.2 million, of which we expect to recognize $51.9 million and $19.3 million as revenue within one year and beyond one year, respectively.

We expect our remaining performance obligations to change quarterly for several reasons including the timing of new contracts and renewals, duration and size of our subscription and support arrangements, variable billing cycles and foreign

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exchange rate fluctuation. We typically issue renewal invoices in advance of the renewal service period. Depending on timing, the initial invoice and subsequent renewal invoices may occur in different quarters. This may result in an increase or decrease to our accounts receivable and deferred revenue.

Costs Capitalized to Obtain Revenue Contracts

Under Topic 606, we capitalize incremental costs to obtain non-cancelable subscription and maintenance and support revenue contracts with amortization periods that may extend longer than the non-cancelable subscription and maintenance and support revenue contract terms.

We capitalize incremental costs of obtaining a non-cancelable subscription and maintenance and support revenue contract with amortization periods of one year or more. The capitalized amounts consist primarily of sales commissions paid to our direct sales force. Capitalized amounts also include (i) amounts paid to employees other than the direct sales force who earn incentive payouts under annual compensation plans that are tied to the value of contracts acquired and (ii) the associated payroll taxes and fringe benefit costs associated with the payments to our employees, including stock-based compensation.

Costs capitalized related to new revenue contracts are generally deferred and amortized on a straight-line basis over a period of benefit that we estimate to be five years. We determine the period of benefit by taking into consideration the period from initial contract through renewal, which constitutes the length of our customer relationship or customer life. Amortization of costs capitalized related to new revenue contracts is included as a component of sales and marketing expense in our operating results.

Results of Operations

The following table sets forth certain items reflected in our condensed consolidated statements of operations expressed as a percent of total revenue for the periods indicated:


		Three Months Ended
		September 30,
		2026		2025
Revenue:
SaaS		95	%	93	%
Professional services		5	%	7	%
Total revenue		100	%	100	%
Cost of revenue:
Cost of SaaS		21	%	18	%
Cost of professional services		6	%	7	%
Total cost of revenue		27	%	25	%
Gross profit		73	%	75	%
Operating expenses:
Research and development		34	%	31	%
Sales and marketing		22	%	17	%
General and administrative		9	%	15	%
Total operating expenses		65	%	63	%
Income from operations		8	%	12	%

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Revenue

We classify our revenue into two categories: SaaS and professional services revenue.

The following table presents our total revenue during the three months ended September 30, 2026 and 2025, respectively:


		Three Months Ended
		September 30,
(in thousands, except percentages)		2026		2025		Change
SaaS		$	20,842	$	21,900	$	(1,058)	(5)	%
Professional services			1,026		1,608		(582)	(36)	%
Total revenue		$	21,868	$	23,508	$	(1,640)	(7)	%

Total revenue decreased approximately $1.6 million during the three months ended September 30, 2026, compared to the same period in fiscal year 2026, due to a decrease of SaaS revenue by $1.1 million and a decrease of professional services revenue by $582,000.

Our revenue was impacted by foreign exchange rate fluctuation between the U.S. Dollar, Euro, and British Pound. We recalculate our current period results using the comparable prior period exchange rates to exclude the impact of foreign exchange rate fluctuation. Foreign exchange rate fluctuation resulted in a decrease of $14,000 and an increase of $195,000 in total revenue during the three months ended September 30, 2026 and 2025, respectively.

SaaS Revenue


		Three Months Ended
		September 30,
(in thousands, except percentages)		2026			2025			Change
SaaS revenue		$	20,842		$	21,900		$	(1,058)	(5)	%
Percentage of total revenue			95	%		93	%

SaaS revenue includes revenue from cloud delivery arrangements, term licenses and embedded OEM royalties and associated support. Revenue from SaaS decreased by $1.1 million during the three months ended September 30, 2026, compared to the same period in fiscal year 2026. The decrease was driven by lower revenue from our legacy customers, mainly because of contract reductions and contract terminations, as well as lower Cisco OEM royalty revenue, partially offset by growth in SaaS revenue from AI customers. We expect SaaS revenue from legacy customers to continue to decline, and we expect growth in AI customer SaaS revenue to only partially offset this decline in fiscal year 2027.

SaaS revenue represented 95% of total revenue for the three months ended September 30, 2026, compared to 93% during the same period in fiscal year 2026. SaaS revenue decreased 5% for the three months ended September 30, 2026, compared to the same period in fiscal year 2026.

Excluding a decrease of $13,000 due to foreign exchange rate fluctuation, SaaS revenue decreased by $1.0 million during the three months ended September 30, 2026, compared to the same period in fiscal year 2026.

Professional Services Revenue


		Three Months Ended
		September 30,
(in thousands, except percentages)		2026			2025			Change
Professional services revenue		$	1,026		$	1,608		$	(582)	(36)	%
Percentage of total revenue			5	%		7	%

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Professional services revenue includes consulting, implementation, training, and managed services. Revenue from professional services decreased by $582,000 during the three months ended September 30, 2026, compared to the same period in fiscal year 2026. We expect professional services revenue to fluctuate depending on the volume and completion of projects.

Excluding a decrease of $1,000 due to foreign exchange rate fluctuation, professional services revenue decreased by $581,000 during the three months ended September 30, 2026, compared to the same period in fiscal year 2026.

Revenue by Customer Level

We define AI customer revenue as total revenue, including SaaS and professional services revenue, generated from customers on our current AI-enabled platform. AI capabilities are integrated into this platform and some AI capabilities are included within broader platform subscriptions rather than sold or priced separately. As a result, we do not attempt to attribute revenue to individual AI features or products. Instead, we distinguish between customers on our current AI-enabled platform and legacy customers on earlier versions of our products that do not include these capabilities, as well as our Cisco OEM relationship. A customer is classified as an AI customer once it is under contract for our current AI-enabled platform, and prior-period amounts are presented based on each customer’s classification at the end of the current reporting period. Accordingly, AI customer revenue includes all revenue from these customers and is not limited to revenue attributable to AI functionality. Management believes this metric is a meaningful indicator of customer adoption of our current platform, and we use it to evaluate adoption, retention, and expansion trends across our customer base. AI customer revenue is an operating metric, should not be considered a substitute for revenue presented in accordance with GAAP, and may not be comparable to similarly titled measures reported by other companies.


	Three Months Ended
	September 30,
(in thousands, except percentages)	2026		2025		Change
Revenue:
AI customers	$	14,364	$	13,451	$	913	7	%
Legacy customers:
Cisco OEM		2,411		2,965		(554)	(19)	%
Other legacy customers		5,093		7,092		(1,999)	(28)	%
Total legacy customers		7,504		10,057		(2,553)	(25)	%
Total revenue	$	21,868	$	23,508	$	(1,640)	(7)	%

Revenue from AI customers increased by $913,000, or 7%, to $14.4 million from $13.5 million for the three months ended September 30, 2026 and 2025, respectively, and represented 66% and 57% of total revenue in those periods. We expect revenue from AI customers to grow as we add new customers, expand our relationships within existing AI customers and migrate legacy customers to our current AI-enabled platform.

Legacy customers include our Cisco OEM revenue and revenue from other customers on earlier versions of our products. Revenue from legacy customers decreased by $2.6 million, or 25%. Revenue from OEM decreased by $554,000, or 19%. This was primarily due to changes in royalty activity and the prospective change beginning in fiscal year 2027 to recognize Cisco OEM royalties on a ratable basis over the royalty payment term rather than recognizing a portion at a point in time. Revenue from other legacy customers decreased by $2.0 million, or 28%. We expect revenue from legacy customers to continue to decline as customers migrate to our AI offerings or reduce or terminate their legacy arrangements, and as we wind down certain legacy offerings, including our legacy messaging business beginning in the second quarter of fiscal year 2027.

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Revenue by Geography


		Three Months Ended
		September 30,
(in thousands, except percentages)		2026		2025		Change
North America		$	17,352	$	18,962	$	(1,610)	(8)	%
Europe, Middle East, & Africa			4,516		4,546		(30)	(1)	%
Total revenue		$	21,868	$	23,508	$	(1,640)	(7)	%

Revenue from North America sales decreased by 8% from $19.0 million during the three months ended September 30, 2025 to $17.4 million during the three months ended September 30, 2026, primarily due to decreases of (i) $908,000 in SaaS revenue and (ii) $702,000 in professional services revenue.

Revenue from EMEA sales decreased by 1% and remained at $4.5 million for the three months ended September 30, 2026, primarily due to a decrease of $150,000 in SaaS revenue, partially offset by an increase of $121,000 in professional services revenue.

Cost of Revenue


		Three Months Ended
		September 30,
(in thousands, except percentages)		2026			2025			Change
SaaS		$	4,648		$	4,171		$	477	11	%
Professional services			1,300			1,660			(360)	(22)	%
Total cost of revenue		$	5,948		$	5,831		$	117	2	%
Percentage of total revenue			27	%		25	%
Gross margin			73	%		75	%

SaaS

Cost of SaaS revenue consists primarily of expenses related to our cloud services and support provided to customers. These expenses are comprised of cloud computing costs, personnel-related costs directly associated with cloud operations, and customer support, including salaries, benefits, bonuses and stock-based compensation and allocated overhead.

Cost of SaaS revenue increased by $477,000 during the three months ended September 30, 2026, from the same period in fiscal year 2026. This increase was primarily due to increases of (i) $284,000 in cloud-computing costs, (ii) $180,000 in personnel-related costs, and (iii) $63,000 in outside consulting costs. Gross margin on SaaS revenue declined primarily because lower legacy SaaS revenue was not accompanied by a corresponding reduction in cloud hosting costs, which remained largely fixed during the period.

Excluding a decrease of $23,000 due to foreign exchange rate fluctuation, cost of SaaS revenue increased by $500,000 during the three months ended September 30, 2026, from the same period in fiscal year 2026.

Professional Services

Cost of professional services consists primarily of personnel-related costs directly associated with our professional services and training departments, including salaries, benefits, bonuses, and stock-based compensation and allocated overhead.

Cost of professional services decreased by $360,000 during the three months ended September 30, 2026, from the same period in fiscal year 2026. This decrease was primarily due to a decrease of $438,000 in personnel-related costs, partially offset by an increase of $80,000 in outside consulting cost.

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Excluding a decrease of $3,000 due to foreign exchange rate fluctuation, cost of professional services revenue decreased by $357,000 during the three months ended September 30, 2026, compared to the same period in fiscal year 2026.

Operating Expenses

Research and Development


		Three Months Ended
		September 30,
(in thousands, except percentages)		2026			2025			Change
Research and development		$	7,410		$	7,315		$	95	1	%
Percentage of total revenue			34	%		31	%

Research and development expense primarily consists of personnel-related expenses directly associated with our engineering, product management and development, and quality assurance staff. Included in these costs are salaries, benefits, bonuses, stock-based compensation, and allocated overhead. Research and development expense also includes outside consulting services contracted for research and development.

Research and development expense increased by $95,000 during the three months ended September 30, 2026, from the same period in fiscal year 2026. This increase was primarily due to an increase of $282,000 in personnel-related costs, partially offset by a decrease of $113,000 in outside consulting costs.

Excluding a decrease of $99,000 due to foreign exchange rate fluctuation, research and development expense increased by $194,000 during the three months ended September 30, 2026, compared to the same period in fiscal year 2026.

Sales and Marketing


		Three Months Ended
		September 30,
(in thousands, except percentages)		2026			2025			Change
Sales and marketing		$	4,774		$	4,029		$	745	18	%
Percentage of total revenue			22	%		17	%

Sales and marketing expense primarily consists of personnel-related expenses directly associated with our sales, marketing and business development staff. Included in these costs are salaries, benefits, bonuses, stock-based compensation, and allocated overhead. Sales and marketing expenses also include amortization of commissions paid to our sales staff, lead generation activities, advertising, trade show and other promotional costs, and, to a lesser extent, occupancy costs and related overhead.

Sales and marketing expenses increased by $745,000 during the three months ended September 30, 2026, from the same period in fiscal year 2026. The increase was primarily due to increases of (i) $568,000 in personnel-related expenses, (ii) $141,000 in lead generation expenses, and (iii) $43,000 in outside consulting expenses. We expect sales and marketing expense to increase over fiscal year 2027 compared to fiscal year 2026, including costs associated with our Solve26 customer conference held in October 2026 and expanded industry-focused and partner go-to-market programs, as we invest to grow AI customer revenue.

Excluding a decrease of $5,000 due to foreign exchange rate fluctuation, sales and marketing expense increased by $750,000 during the three months ended September 30, 2026, compared to the same period in fiscal year 2026.

General and Administrative


		Three Months Ended
		September 30,
(in thousands, except percentages)		2026			2025			Change
General and administrative		$	2,043		$	3,500		$	(1,457)	(42)	%
Percentage of total revenue			9	%		15	%

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General and administrative expense primarily consists of personnel-related expenses directly associated with our finance, human resources, administrative and legal personnel. Included in these costs are salaries, benefits, bonuses, warrants, and stock-based compensation and allocated overhead. General and administrative expenses also include fees for professional services, provision for credit losses and, to a lesser extent, occupancy costs and related overhead.

General and administrative expenses decreased by $1.5 million during the three months ended September 30, 2026, from the same period in fiscal year 2026. The decrease was primarily due to decreases of (i) $1.35 million in warrant expense and (ii) $117,000 in personnel-related costs.

Excluding a decrease of $6,000 due to foreign exchange rate fluctuation, general and administrative expense decreased by $1.5 million during the three months ended September 30, 2026, compared to the same period in fiscal year 2026.

Income from Operations


		Three Months Ended
		September 30,
(in thousands, except percentages)		2026			2025			Change
Income from operations		$	1,693		$	2,833		$	(1,140)	(40)	%
Operating margin			8	%		12	%

Income from operations was $1.7 million and $2.8 million with an operating margin of 8% and 12% during the three months ended September 30, 2026 and 2025, respectively. The decrease was primarily due to lower total revenue and higher sales and marketing expense, partially offset by the absence of the warrant expense recognized in the prior-year period. We expect income from operations for fiscal year 2027 to be lower than fiscal year 2026, and we may incur operating losses in certain quarters, as revenue from legacy customers declines and we increase our investment in sales and marketing.

Interest Income

Interest income primarily consists of interest earned on money market accounts. Interest income was $524,000 and $462,000 during the three months ended September 30, 2026 and 2025, respectively.

Other Income, Net

Other income, net was $204,000 and $455,000 during the three months ended September 30, 2026 and 2025, respectively. Other income, net primarily included foreign exchange rate fluctuations on international trade receivables, net of transactions.

Income Tax Provision

Provision for income taxes consists of federal, state, and foreign income taxes. We recorded an income tax provision of $870,000 and $930,000 for the three months ended September 30, 2026 and 2025, respectively.

Liquidity and Capital Resources

Overview

As of September 30, 2026 and June 30, 2026, our principal sources of liquidity were cash and cash equivalents, restricted cash, and accounts receivable totaling $89.3 million and $97.7 million, respectively. Our cash, cash equivalents and restricted cash were $71.3 million and $73.3 million as of September 30, 2026 and June 30, 2026, respectively. We had no restricted cash as of September 30, 2026.

Based upon our current business plan, we believe that existing capital resources will enable us to maintain current and planned operations for at least the next 12 months. Over the longer term, beyond the next 12 months, we expect existing

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capital resources to meet our cash needs. From time to time, however, we may consider opportunities for raising additional capital. We can make no assurances that such opportunities will be available to us on economic terms we consider favorable, if at all. Our expectations as to our future cash flows and our future cash balances are subject to a number of assumptions, including assumptions regarding the anticipated decline in revenue from legacy customers, the rate of growth in revenue from AI customers, the level of our investment in sales and marketing, our ability to retain existing customers and customer purchasing and payment patterns, many of which are beyond our control.

Cash Flows

For the three months ended September 30, 2026 and 2025, our cash flows were as follows (in thousands):


	Three Months Ended
	September 30,
	2026			2025
Net cash provided by operating activities	$	1,775		$	10,432
Net cash used in investing activities		(25)			(224)
Net cash used in financing activities		(3,619)			(1,225)

Cash provided by operating activities mainly consists of net income adjusted for non-cash expense items such as depreciation and amortization, expense associated with stock-based awards and warrants, recognition of deferred revenue, and changes in operating assets and liabilities during the period.

Net cash provided by operating activities decreased by $8.7 million during the three months ended September 30, 2026, from the same period in fiscal year 2026, driven primarily by the timing of collection of an annual payment from a large U.S. federal government customer, which was received in the fourth quarter of fiscal year 2026 rather than in the first quarter as in the prior year, as well as lower net income.

Net cash used in investing activities decreased by $199,000 during the three months ended September 30, 2026, from the same period in fiscal year 2026, driven primarily by lower volume activities related to the purchase of equipment for employees and facility expenditures. Historically, cash used in investing activities has been used to purchase equipment and software to support our business and growth.

Net cash used in financing activities increased by $2.4 million during the three months ended September 30, 2026, from the same period in fiscal year 2026. Funds used for repurchases of our common stock were $3.6 million and $1.5 million during the three months ended September 30, 2026 and 2025, respectively. Funds received includes proceeds primarily from the exercise of employee stock options and purchases of common stock pursuant to our ESPP.

Commitments

Our principal commitments consist of obligations under leases for office space. Lease agreements are evaluated to determine whether an arrangement is or contains a lease in accordance with ASC 842, Leases. As of September 30, 2026, the future non-cancelable minimum payments under these commitments were approximately $3.1 million.

Off-Balance Sheet Arrangements

As of September 30, 2026, we had no off-balance sheet arrangements requiring disclosure under Instruction 8 to Item 303(b) of Regulation S-K.

New Accounting Pronouncements

See Note 1 “Summary of Business and Significant Accounting Policies” to the condensed consolidated financial statements for our discussion of new accounting pronouncements adopted and those pending.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

Foreign Currency Exchange Risk

We develop products in the United States and India and sell these products in the United States and internationally. Generally, international sales are made in local currency. As a result, our financial results could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in foreign markets. Identifiable assets denominated in foreign currency as of September 30, 2026 totaled approximately $34.4 million. A 10% increase in the value of the dollar relative to other currencies would decrease the value of these assets by $3.4 million between September 30, 2026 and our next financial reporting period. We do not currently use derivative instruments to hedge against foreign exchange risk. As such, we are exposed to market risk from fluctuations in foreign currency exchange rates, principally from the exchange rate between the U.S. Dollar, on the one hand, and the Euro, British Pound and Indian Rupee, on the other hand. An unfavorable change in the foreign currency exchange rates may cause an adverse effect on our financial position or results of operations.

Interest Rate Risk

Our exposure to market risk for changes in interest rates relates primarily to interest earned on our cash and cash equivalents. The primary objective of our investment activities is to preserve our capital to fund operations. We also seek to maximize income from our investments without assuming significant risk. Our investment policy provides for investments in short-term, low-risk, investment-grade debt instruments. These investments are subject to interest rate risk and will decrease in value if market interest rates increase.

We currently do not hedge interest rate exposure, and we do not have any foreign currency or other derivative financial instruments. To date, we have not experienced a loss of principal on any of our investments. Although we currently expect that our ability to access or liquidate these investments as needed to support our business activities will continue, we cannot ensure that this will not change. We believe that, if market interest rates were to change immediately and uniformly by 10% from levels between September 30, 2026 and our next financial reporting period, the impact on the fair value of these securities or our cash flows or income would not be material.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (Exchange Act) that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Our disclosure controls and procedures have been designed to meet reasonable assurance standards. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Based on their evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2026, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Controls

There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are not currently a party to any legal proceedings, and are not aware of any pending or threatened legal proceedings against us that we believe could have a material adverse effect on our business, consolidated operating results, or consolidated financial condition. In the ordinary course of business, we are involved in various legal proceedings and claims related to alleged infringement of third-party patents and other intellectual property rights, commercial, corporate and securities, labor and employment, wage and hour, and other claims. We have been, and may in the future be, put on notice and/or sued by third parties for alleged infringement of their proprietary rights, including patent infringement.

We evaluate all claims and lawsuits with respect to their potential merits, our potential defenses and counterclaims, settlement or litigation potential and the expected effect on us. Our technologies may be subject to injunction if they are found to infringe the rights of a third-party. In addition, our agreements require us to indemnify our customers for third-party intellectual property infringement claims, which could increase the cost to us of an adverse ruling on such a claim.

Item 1A. Risk Factors

The risks and uncertainties described below are not the only ones facing us. Other events that we do not currently anticipate or that we currently deem immaterial also may affect our results of operations, cash flows and financial condition.

Risks Related to Our Business and Strategy

If we are unable to grow AI customer revenue sufficiently to offset declining legacy customer revenue, our business and operating results could be adversely affected.

We are transitioning our business toward customers on our current AI-enabled platform and away from legacy customers on earlier versions of our products, including our Cisco OEM relationship. Revenue from legacy customers decreased 25% during the three months ended September 30, 2026, compared to the same period in fiscal year 2026, and we expect it to continue to decline, including as a result of customer contract reductions and terminations, lower OEM royalty revenue and the planned wind-down of certain legacy offerings, including our legacy messaging business. As a result, we expect total revenue to decline in fiscal year 2027, and it may continue to decline in future periods.

Our ability to offset this decline depends on growing revenue from AI customers through new customers, expansion within existing AI customers and migration of legacy customers to our current platform. Legacy customers may decide not to migrate, may migrate on a smaller scale or at lower prices than they paid for our legacy products, or may choose a competing solution. Legacy revenue may also decline faster than anticipated, while increased sales and marketing investments may adversely affect our operating margins before generating sufficient additional revenue, if at all. If AI customer revenue does not grow as we expect, or if legacy revenue declines faster than we expect, our revenue, operating results, cash flows and stock price could be adversely affected, and we may need to reduce our planned investments.

We evaluate the progress of this transition using AI customer revenue and other customer-level metrics. These company-defined metrics involve judgments regarding customer classification and may not be comparable to similarly titled metrics reported by other companies.

We may not achieve our announced long-term financial targets, which are based on assumptions that may prove inaccurate.

From time to time, we announce long-term financial targets, including targets for revenue, AI customer revenue, annual recurring revenue and gross margin. These targets reflect our then-current beliefs and are based on numerous assumptions, including assumptions regarding the growth of AI customer revenue, the rate of decline in legacy revenue, market adoption of AI knowledge solutions, competition, pricing, our sales and marketing effectiveness and general economic conditions, many of which are beyond our control. These targets are not forecasts or guidance for any specific fiscal quarter or year,

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and actual results may differ materially. If we fail to achieve our long-term targets, or if we change or withdraw them, the market price of our common stock could decline.

Our business is influenced by a range of factors that are beyond our control and that we have no comparative advantage in forecasting.

Factors influencing our business include:

●	general economic and business conditions;

●	currency exchange rate fluctuations;

●	the overall demand for enterprise software and services;

●	customer acceptance of cloud-based and AI-enabled solutions;

●	governmental budgetary constraints or shifts in government spending priorities; and

●	general political and regulatory developments.

The global economic climate continues to influence our business. This includes factors such as a general tightening in the credit markets, lower levels of liquidity, increases in the rates of default and bankruptcy, and extreme volatility in credit, equity and fixed income markets. These macroeconomic developments have negatively affected our business, operating results and financial condition in the past, and may continue to do so in the future. A general weakening of, and related declining corporate confidence in, the global economy or the curtailment in government or corporate spending has caused, and may in the future cause, certain current or potential customers to reduce their technology budgets or be unable to fund software or services purchases, which has resulted, and may in the future result, in customers delaying, decreasing or cancelling purchases of our products and services or delaying payment for previously purchased products and services.

Because we recognize revenue when we have satisfied performance obligations to customers in connection with our sales contracts, most of our revenue each quarter results from recognition of deferred revenue related to agreements entered into during previous quarters. Consequently, declines in new or renewed subscription agreements that occur in one quarter will largely be felt in future quarters, both because we may be unable to generate sufficient new revenue to offset the decline and because we may be unable to adjust our operating costs and capital expenditures to align with the changes in revenue. In addition, our subscription model makes it more difficult for us to increase our revenue rapidly in any period, because revenue from new customers must be recognized over the applicable subscription term.

Other factors that have caused, and may in the future cause, our revenue and operating results to fluctuate include:

●	timing of customer budget cycles;

●	the priority our customers place on our products compared to other business investments;

●	size, timing and contract terms of new customer contracts, and unpredictable and often lengthy sales cycles;

●	reduced renewals;

●	the rate of decline in revenue from legacy customers, including the wind-down of legacy offerings and changes in royalty revenue under our OEM arrangements;

●

competitive factors, including new product introductions, upgrades and discounted pricing or special payment terms offered by our competitors, as well as strategic actions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy;

●	technical difficulties, errors or service interruptions in our solutions that cause customer dissatisfaction with our solutions;

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●	consolidation among our customers, which may alter their buying patterns, or business failures that may reduce demand for our solutions;

●	operating expenses associated with expansion of our sales force or business, and our product development efforts;

●	cost, timing and management efforts related to the introduction of new features to our solutions;

●	our ability to obtain, maintain and protect our intellectual property rights and adequately safeguard the information imported to our solutions or otherwise provided to us by our customers; and

●	extraordinary expenses such as impairment charges, litigation or other payments related to settlement of disputes.

Any of these developments may adversely affect our revenue, operating results and financial condition. Furthermore, we maintain a provision for credit losses resulting from the inability of our customers to make required payments. We have experienced instances in which customers have failed to make required payments, and in such cases, we may be required to defer revenue recognition on sales to affected customers. We have recorded, and may in the future be required, to record additional reserves or write-offs, or defer revenue on sales transactions, which could negatively impact our financial results.

Our SaaS business model is subject to certain risks.

Our business is highly dependent on our ability to continue to expand our SaaS business and cloud operations, including growing our AI customer base and transitioning our legacy customers to our current AI-enabled platform. Some customers have elected not to renew their subscriptions, and customers have reduced, and may in the future reduce, their subscriptions. If customers choose not to renew, or further reduce, their subscriptions, our revenue and operating results could be materially adversely affected.

The deferral or loss of one or more significant orders has adversely affected, and may in the future materially adversely affect our operating results, especially in a given quarter. As with other software-focused companies, a large amount of our quarterly business tends to come in the last few weeks, or even the last few days, of each quarter. This trend complicates the process of accurately predicting revenue and other operating results, particularly on a quarterly basis. In addition, our business is subject to seasonal factors that have caused, and may continue to cause, our results to fluctuate from quarter to quarter.

We cannot accurately predict subscription renewal rates and the impact these rates may have on our future revenue and operating results.

We allow our customers to elect not to renew their subscriptions for our service after the expiration of their initial subscription period, which is typically 12 to 36 months, and some customers have elected not to renew. In addition, some customers have renewed, and other customers may in the future renew, for fewer subscriptions (in quantity or products) or for shorter contract lengths. We cannot accurately predict renewal rates given our varied customer base of enterprise customers and the number of multiyear subscription contracts. Our renewal rates have fluctuated and may decline or fluctuate as a result of a number of factors, including customer dissatisfaction with our service, decreases in customers’ spending levels, decreases in the number of users at our customers, pricing changes and general economic conditions. If our customers do not renew their subscriptions for our service or reduce the number of paying subscriptions at the time of renewal, our revenue will be adversely affected, and our business may suffer.

Our future success also depends in part on our ability to sell additional features and services, more subscriptions or enhanced editions of our service to our current customers. This may also require increasingly sophisticated and costly sales efforts that are targeted at senior management. Similarly, the rate at which our customers purchase new or enhanced services depends on a number of factors, including general economic conditions and our customers’ reactions to price changes related to these additional features and services. If our efforts to upsell to our customers are not successful and negative reaction occurs, our business may suffer.

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Our lengthy sales cycles and the difficulty in predicting timing of sales or delays may impair our operating results.

The long sales cycle for our products has caused, and may continue to cause, SaaS revenue and operating results to vary significantly from period to period. The sales cycle for our products can be six months or more and varies substantially from customer to customer. Because we sell complex and deeply integrated solutions, it can take many months of customer education to secure sales. Since our potential customers may evaluate our products before, if ever, executing definitive agreements, we may incur substantial expenses and spend significant management and legal effort in connection with a potential customer.

Our multi-product offering and the increasingly complex needs of our customers contribute to a longer and unpredictable sales cycle. Consequently, we often face difficulty predicting the quarter in which expected sales will actually occur. This has contributed, and may continue to contribute, to the uncertainty and fluctuations in our future operating results. In particular, the corporate decision-making and approval process of our customers and potential customers has become more complicated. This has caused our average sales cycle to further increase and, in some cases, has prevented the closure of sales that we believed were likely to close.

We derive a substantial portion of our revenue from sales to a relatively small number of customers. During the three months ended September 30, 2026, our ten largest customers accounted for approximately 57% of our total revenue, compared with approximately 59% for the same period in fiscal year 2026. Our largest customer accounted for approximately 13% and 15% of our total revenue during the three months ended September 30, 2026 and 2025, respectively. The composition of these customers has varied in the past, and we expect that it will continue to vary over time. The loss of any significant customer or a decline in business with any significant customer has adversely affected, and could in the future materially and adversely affect, our financial condition and results of operations.

The markets in which we compete are intensely competitive and rapidly evolving. Other than product innovation and existing customer relationships, there are no substantial barriers to entry in this market, and established or new entities may enter this market in the future. We compete with application software providers, including NICE Ltd. and Verint Systems Inc. In the knowledge management systems market specifically, we also compete with providers of knowledge management systems, including KMS Lighthouse, Shelf, Talkdesk, Upland Software, Inc., and USU. In addition, we occasionally compete with some of our platform partners where some of our product capabilities overlap, including Five9, Genesys, Microsoft, Salesforce, and ServiceNow. We also compete with providers of general-purpose generative AI platforms and AI models, and with enterprises that develop knowledge, AI and related capabilities using their own internal resources. Large AI model providers and enterprise software platforms may incorporate knowledge, retrieval or grounding capabilities into their offerings, which could increase competition, create pricing pressure or adversely affect demand for our solutions.

We believe that competition will continue to be fierce as current competitors increase the sophistication of their offerings and as new participants enter the market. Many of our current and potential competitors have longer operating histories, larger customer bases, broader brand recognition, and significantly greater financial, marketing and other resources. Our brand awareness and market visibility may also be more limited than that of certain larger or more established competitors, which has adversely affected, and may continue to adversely affect, our ability to attract prospective customers and compete for enterprise opportunities. With more established and better-financed competitors, these companies have been, and may continue to be, able to undertake more extensive marketing campaigns, adopt more aggressive pricing policies, and make more attractive offers to businesses to induce them to use their products or services. If we are unable to compete successfully, our business will be adversely affected.

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We are also investing in AI across the entire company and integrating generative AI capabilities into our product and service offerings. The market for AI technologies and services is highly competitive and rapidly evolving. We have incurred, and expect to continue to incur, significant development and operational costs to build and support AI capabilities necessary to meet the needs of our customers. To compete effectively, we must also be responsive to technological change, potential regulatory developments, and public scrutiny. Such competitive pressure has resulted, and may continue to result, in decreased sales volumes, price reductions, and/or increased operating costs, such as for research and development, marketing, and sales activities. This has resulted, and may continue to result, in lower revenue, gross margins, and operating income. In addition, customers are currently assessing and evolving their AI utilization strategy, so it is difficult to estimate with any reasonable degree of precision the impact of generative AI product offerings on our future revenue, the expected timing or demand for our products and services, and the extent to which customer investment in AI-enabled solutions may displace or accelerate purchases of our existing offerings.

Our ability to grow our business depends in part on expanding the effectiveness and capacity of our sales force. We are increasing our investment in sales and marketing, including industry-focused programs, customer and industry events, partner initiatives and demand generation, ahead of the revenue we expect these investments to generate. These investments may not result in increased sales opportunities, new customers or expansion within our installed base in the timeframe we expect, or at all, and may continue to adversely affect our profitability. We have also experienced workforce reductions and turnover, and additional turnover or staffing constraints could limit our ability to attract new customers and expand relationships with existing customers. If our sales and marketing investments do not generate the anticipated results, our business and operating results could be adversely affected.

Due to the complexity of our AI knowledge platform and related products and services, we must utilize highly trained sales personnel to educate prospective customers regarding the use and benefits of our products and services as well as provide effective customer support. If we have turnover in our sales and marketing teams, we may not be able to successfully compete with our competitors, and our results of operations and financial condition may be harmed.

Our failure to maintain, develop, or expand strategic and third-party distribution channels would impede our revenue growth.

Our success and future growth depend in part upon the skills, experience, performance, and continued service of our distribution partners, including software and hardware vendors and resellers. Our distribution partners engage with us in a number of ways, including assisting us to identify prospective customers, distributing our products and services in geographies where we do not have a physical presence and distributing our products and services where they are considered complementary to other products of the partner or third-party products distributed by the partner. We believe that our future success depends in part upon our ability to develop, maintain and expand strategic, long-term and profitable partnerships and reseller relationships. We have experienced, and may in the future experience, instances in which distribution partners have not marketed, resold, implemented or supported our products to the extent anticipated, or have devoted greater resources to competing products and services. If we are unable to develop, maintain and expand these relationships for any reason, including as a result of any change in the leadership of our distribution partners, or if any existing or future distribution partners fail to successfully market, resell, implement or support our products for their customers, or if distribution partners represent multiple providers and devote greater resources to market, resell, implement and support competing products and services, our future revenue growth could be impeded.

We sometimes rely on distribution partners to recommend our products to their customers. We likewise depend on broad market acceptance by these distribution partners of our product and service offerings. Our agreements generally do not prohibit competitive offerings and our distribution partners may develop market or recommend software applications that compete with our products. We have devoted resources to partnerships that have not always proceeded or generated revenue or other results as anticipated, and this may occur again in the future. Once partnerships are forged, some relationships may not be renewed, and we may be unable to renew other relationships in the future or may only be able to renew them on less favorable terms. If we lose strategic third-party relationships, fail to renew or develop new

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relationships, or fail to fully exploit revenue opportunities within such relationships, our results of operations and future growth may suffer.

Difficulties and delays in customers implementing our products could harm our revenue and margins.

We generally recognize revenue upon the transfer of control of promised services to our customers in the amount that is commensurate with the consideration that we expect to receive in exchange for those services. If an arrangement requires significant customization or implementation services from us, recognition of the associated subscription and service revenue has been, and may in the future be, delayed. The timing of the commencement and completion of these services is subject to factors that may be beyond our control, as this process may require access to the customers’ facilities and coordination with the customer’s personnel after delivery of the software obligations. In addition, customers could cancel or delay product implementations. Implementation typically involves working with sophisticated software, computing and communications systems. If we experience difficulties with implementation or do not meet project milestones in a timely manner, we could be obligated to devote more customer support, engineering, and other resources to a particular project. Some customers have required, and may in the future require, us to develop customized features or capabilities. If new or existing customers cancel or have difficulty deploying our products or require significant amounts of our professional services, support, or customized features, revenue recognition could be cancelled or further delayed and our costs could increase, causing increased variability in our operating results.

Implementation services may be performed by our own staff, by a third-party partner, or by a combination of the two. Our strategy is to work with partners to increase the breadth of capability and depth of capacity for delivery of these services to our customers, and we expect the number of our partner-led implementations to continue to increase over time. If a customer is not satisfied with the quality of work performed by us or a partner or with the type of professional services or functionality delivered, even if we are not contractually responsible for the partner services, then we could incur additional costs to address the situation, the profitability of that work might be impaired and the customer’s dissatisfaction with our or our partner’s services could damage our ability to expand the scope of functionality subscribed to by that customer. In addition, negative publicity related to our customer relationships, regardless of its accuracy, may further damage our business by affecting our ability to compete for new business with current and prospective customers.

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We derived 21% and 19% of our revenue from EMEA sales during the three months ended September 30, 2026 and 2025, respectively. In addition to those discussed elsewhere in this section, our EMEA sales operations are subject to a number of specific risks, such as:

●	general economic conditions in each country or region in which we do or plan to do business;

●	foreign currency fluctuations and imposition of exchange controls;

●	changes in data privacy laws including European Union’s General Data Protection Regulation (GDPR) and other emerging privacy or AI-related regulations;

●	difficulty and costs in staffing and managing our international operations;

●	difficulties in collecting accounts receivable and longer collection periods;

●	health or similar issues, such as a pandemic or epidemic;

●	various international trade restrictions and tax consequences;

●	hostilities or geopolitical conflicts in various parts of the world, such as the ongoing conflict involving the United States and Iran, the ongoing war between Russia and Ukraine, and continuing geopolitical instability and hostilities in the Middle East; and

●	reduced intellectual property protections in some countries.

We have experienced, and may continue to experience, adverse effects from certain of these risks, including foreign currency fluctuations, increased costs of staffing and managing our international operations, and geopolitical and regulatory developments. Any of the above risks could adversely affect our international operations, reduce our revenue from customers outside of the United States or increase our operating costs, each of which could adversely affect our business, results of operations, financial condition, and growth prospects.

As of September 30, 2026, approximately 44% of our workforce was employed in India. Of our employees in India, 59% are allocated to research and development. Although the movement of certain operations internationally was principally motivated by cost cutting, the continued management of these remote operations requires significant management attention and financial resources that have affected, and may continue to affect, our operating performance. In addition, with the significant increase in the number of foreign businesses that have established operations in India, the competition to attract and retain employees there has increased significantly. As a result of the increased competition for skilled workers, we have experienced increased compensation costs and expect these costs to increase in the future. Our reliance on our workforce in India makes us particularly susceptible to disruptions in the business environment in that region. In particular, sophisticated telecommunications links, high-speed data communications with other eGain offices and customers, and overall consistency and stability of our business infrastructure are vital to our day-to-day operations, and we have experienced, and may in the future experience, disruptions or impairments to such infrastructure that could adversely affect our financial condition and results. In addition, the maintenance of stable political relations between the U.S., the European Union (EU) and India are also of great importance to our operations. Changes in U.S.-India trade policy have introduced uncertainty into the relationship, including the imposition in 2025 of additional tariffs on certain Indian goods and subsequent modifications to those tariffs in 2026. Future changes in tariffs, trade restrictions or other trade policies could create additional uncertainty or adversely affect the broader business environment in India.

Any of these risks have had, and may in the future have, a significant impact on our product development, customer support, or professional services. To the extent the benefit of maintaining these operations abroad does not exceed the expense of establishing and maintaining such activities, our operating results and financial condition will suffer.

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Our customers have in the past experienced some interruptions with our cloud operations. We believe that these interruptions may continue to occur from time to time. These interruptions have resulted, and may in the future result, from hardware and operating system failures, issues with third-party cloud infrastructure and platform providers, or other operational disruptions. Such interruptions have affected, and may in the future affect, the availability or performance of our hosted operations and our ability to provide remote management services. Our business could be materially harmed if we experience frequent or long system interruptions. We have also experienced, and may continue to experience, occasional temporary capacity constraints due to sharply increased traffic or other Internet-wide disruptions, which have caused, and may in the future cause, unanticipated system disruptions, slower response times, impaired quality, and degradation in levels of customer service. If these interruptions or disruptions become more frequent or prolonged, our business and reputation could be seriously harmed.

Our success largely depends on the efficient and uninterrupted operation of our computer and communications hardware network systems, and third-party cloud platforms. We currently serve our customers from third-party data center facilities and third-party PaaS providers operated in the U.S. and other international locations. We have experienced, and may in the future experience, service interruptions or impairments resulting from issues affecting our systems or those of our third-party providers. Any damage to, or failure of, our systems or those of our third-party providers generally could interrupt service or impair the use or functionality of our cloud operations. In addition, as we continue to increase the number of customers and users on our cloud operations, we will need to increase the capacity of our cloud infrastructure. If we do not increase our capacity in a timely manner, customers could experience interruptions or delays in access to our cloud operations. Customer data that we store in third-party cloud infrastructure providers may also be vulnerable to damage or interruption from floods, fires, earthquake, power loss, telecommunications failures and similar events. Any damage to, or failure of, our systems, or those of our third-party providers, could result in impairment of, or interruptions in, our service. Impairment or interruptions in our service may reduce our revenue, cause us to issue credits, pay penalties, or cause customers to terminate their subscriptions and adversely affect our renewal rate and our ability to attract new customers. Our business will also be harmed if our customers and potential customers believe our cloud operations are unreliable.

We maintain business continuity and disaster recovery plans designed to mitigate the impact of service disruptions, including data backup and recovery capabilities. Recovery times and service levels may vary depending on the services purchased and applicable contractual commitments. However, these measures may not prevent service interruptions or ensure timely restoration of services in all circumstances. Prolonged outages or failures in our disaster recovery capabilities could disrupt customer operations, result in contractual claims or customer terminations, and adversely affect our business and reputation.

We have entered into support obligations with our customers that require minimum performance standards, including standards regarding the response time of our support services. If we fail to meet these standards, our customers could terminate their relationships with us, and we could be subject to contractual refunds or service credits, and exposure to claims for losses from our customers.

Software errors could be costly and time-consuming for us to correct, and could harm our reputation and impair our ability to sell our solutions.

Our solutions are based on complex software that may contain errors, or “bugs,” that could be costly to correct, harm our reputation, and impair our ability to sell our solutions to new customers. Moreover, customers relying on our solutions may be more sensitive to such errors, and potential security vulnerabilities and business interruptions for these applications. If we incur substantial costs to correct any errors of this nature, our operating margins could be adversely affected. Because our customers depend on our solutions for critical business functions, any service interruptions could result in lost or delayed market acceptance and lost sales, higher service-level credits and warranty costs, diversion of development resources, and product liability suits.

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The terms we agree to in our Service Level Agreements or other contracts may result in increased costs or liabilities, which would in turn affect our results of operations.

Our Service Level Agreements provide for service credits for system unavailability, and in some cases, indemnities for loss, damage, or costs resulting from use of our system. If we were required to provide any of these in a material way, our results of operations would suffer.

We have invested, and expect to continue to invest, substantial resources to expand, market, implement, and refine our cloud offerings. If we are unable to increase the volume of our subscription business, we may not be able to achieve sustained profitability.

Factors that could harm our ability to improve our gross margins, which may affect our operating profitability, include:

●	increased costs to license and maintain third-party software embedded in our software applications or the cost to create or substitute such third-party software if it can no longer be licensed on commercially reasonable terms;

●	our inability to maintain or increase the prices customers pay for our products and services based on competitive pricing pressures and general economic conditions limiting customer demand;

●	increased cost of third-party services providers, including data centers for our cloud operations and professional services contractors performing implementation and technical support services to cloud customers;

●	customer contractual requirements that delay revenue recognition until customer implementations commence production operations or customer-specific requirements are met;

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significant attrition as customers decide for their own economic or other reasons to not renew their subscription contracts when they are up for renewal negatively impacting the efficiency of our data centers and leading to the costs being spread over fewer customers negatively impacting gross margin; and

●	the inability to implement, or delays in implementing, technology-based efficiencies and efforts to streamline and consolidate processes to reduce operating costs.

We depend on the widespread acceptance and use of our applications as an effective foundation for enterprises deploying AI in customer service and other knowledge-intensive operations, and for managing high volumes of customer interactions across digital, AI-enabled and assisted-service channels. The market for AI knowledge solutions is still emerging, and industry analysts have only recently begun to evaluate customer service knowledge management as a distinct software category. Enterprises may not recognize the need for a governed knowledge foundation for AI, may defer AI deployments, or may rely on general-purpose AI platforms or internally developed tools instead. While we believe the potential to be very large, we cannot accurately estimate the size or growth rate of the potential market for such product and service offerings generally, and we do not know whether our products and services in particular will achieve broad market acceptance. The market for AI-enabled customer service and knowledge solutions is rapidly evolving, and concerns over the accuracy, security and reliability of AI systems, the privacy of users, the cost of AI deployments or other issues may slow enterprise adoption. If the market for our applications fails to grow or grows more slowly than we currently anticipate, our business will be seriously harmed.

Furthermore, our business model is premised on business assumptions that are still evolving. Our business model assumes that enterprises will increasingly deploy AI agents and AI-assisted workflows in customer service and other operations, and that accurate, governed and continuously maintained knowledge will be necessary for those deployments to be effective, compliant and cost-efficient. If any of these assumptions are incorrect, or if enterprises do not adopt AI-enabled technologies in a timely manner, our business will be seriously harmed and our stock price could decline.

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If we are unable, for technological, legal, financial or other reasons, to adapt in a timely manner to changing market conditions in the online sales, marketing, customer service and/or e-commerce industry or our customers’ or Internet users’ requirements or preferences, our business, results of operations and financial condition would be materially and adversely affected. Business on the Internet is characterized by rapid technological change. In particular, generative AI, agentic AI and other AI technologies are evolving rapidly and are changing customer expectations regarding the functionality, performance, automation and cost of customer engagement and knowledge management solutions. In addition, the market for online sales, marketing, customer service and expert advice solutions is relatively new. Changes in customer and Internet user requirements and preferences, frequent new product and service introductions embodying new technologies, including AI-enabled technologies, and the emergence of new industry standards and practices such as but not limited to security standards could render our services and our proprietary technology and systems obsolete or less competitive. We have invested, and expect to continue to invest, significant resources in developing and integrating AI capabilities into our products and services. However, the pace and direction of AI development and customer adoption are difficult to predict, and our AI offerings may not develop as anticipated or achieve the level of customer adoption that we expect. The rapid evolution of these products and services will require that we continually improve the performance, features and reliability of our services. Our success will depend, in part, on our ability to:

●	enhance the features and performance of our services, including our AI-enabled capabilities;

●	develop and offer new services that are valuable to companies; and

●	respond to technological advances in AI and other technologies and emerging industry standards and practices in a cost-effective and timely manner.

If any of our new services, including upgrades to our current services, or new or enhanced AI capabilities, do not meet our customers’ expectations, our business may be harmed. Our development and deployment of AI-enabled offerings may also require substantial investments in technology, infrastructure, third-party models and services, personnel, security and compliance. Updating our technology may require significant additional capital expenditures and could materially and adversely affect our business, results of operations, and financial condition.

If new services require us to grow rapidly, this could place a significant strain on our managerial, operational, technical, and financial resources. In order to manage our growth, we could be required to implement new or upgraded operating and financial systems, procedures and controls. Our failure to expand our operations in an efficient manner could cause our expenses to grow, our revenue to decline or grow more slowly than expected and could otherwise have a material adverse effect on our business, results of operations and financial condition.

We employ third-party technologies for use in or with our platform and the inability to license such technologies on commercially reasonable terms or the inability to maintain these licenses or errors in the software we license could result in increased costs, or reduced service levels, which could adversely affect our business. Our increasing reliance on third-party AI technologies and model providers may also expose us to additional operational, financial, and contractual risks.

Our platform incorporates certain third-party software obtained under licenses from other companies, and we use third-party software development tools and other third-party technologies, including APIs, libraries, cloud-based services and AI models, as we continue to develop and enhance our platform. We anticipate that we will continue to rely on such third-party software in the future. Although we believe that there are commercially reasonable alternatives to many of the third-party software we currently license, this may not always be the case, or it may be difficult or costly to replace such software. In addition, integration of the software used in our platform with new third-party software may require significant work and require substantial investment of our time and resources. Also, to the extent that our platform depends upon the successful operation of third-party software in conjunction with our software, any undetected errors or defects in this third-party software could prevent the deployment or impair the functionality of our platform, delay new feature introductions, result in a failure of our functionality, and injure our reputation. Third-party providers may also modify, discontinue or restrict access to their technologies, change their pricing or licensing terms, or impose new technical, contractual or usage limitation. Our use of additional or alternative third-party software would require us to enter into license agreements with

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third parties. To the extent we need to license third-party technologies, we may be unable to do so on commercially reasonable terms or at all.

Third-party licenses may expose us to increased risks, including risks associated with the integration of new technology, the diversion of resources from the development of our own proprietary technology, dependency on the continued availability and performance of third-party technologies, and our inability to generate revenue from new technology sufficient to offset associated acquisition and maintenance costs. In the event that we are not able to maintain our licenses to third-party software, or cannot obtain licenses to new software as needed, or in the event third-party software used in conjunction with our platform contains errors or defects, or becomes unavailable or materially more costly, our business, operating results, and financial condition may be adversely affected.

We use offshore resources to perform new product and services development and provide support and professional consulting efforts, which requires detailed technical and logistical coordination. We must ensure that our international resources and personnel are aware of and understand development specifications and customer support, as well as implementation and configuration requirements and that they can meet applicable timelines. If we are unable to maintain acceptable standards of quality in support, product development and professional services, our attempts to reduce costs and drive growth through new products and margin improvements in technical support and professional services may be negatively impacted, which would adversely affect our results of operations. Outsourcing services to offshore providers may expose us to misappropriation of our intellectual property or that of our customers, or make it more difficult to defend intellectual property rights in our technology.

If we are unable to hire and retain key personnel, our business and results of operations would be negatively affected.

Our success depends in large part on the skills, experience and performance of our senior management, engineering, sales, marketing and other key personnel. The loss of the services of any of our senior management or other key personnel, including our Chief Executive Officer and co-founder, Ashutosh Roy, could harm our business. Additionally, in the technology industry, there is substantial and continuous competition for highly skilled business, product development, technical and other personnel. We have experienced, and expect to continue to experience, significant competition for qualified personnel and increased compensation costs in certain markets. Such increased cost may not be offset by either improved productivity or higher sales. Our failure to recruit new personnel and to retain and motivate existing personnel could have significant negative effects on us, including impairing our ability to expand our business, and our results of operations could suffer.

We may not be able to realize the benefits of offering the limited, free “Innovation in 30 Days” version of our service.

We offer pilot programs and limited trials of our subscription services to existing and prospective customers in order to promote usage, brand and product awareness, and adoption. We invest time and resources for such initial engagements, which may not be fully recovered through pilot fees or subsequent subscription agreements. Some customers do not enter into definitive contracts for our paid subscription service despite the time and effort we may have expended on such initiatives. To the extent that these customers do not result in long-term paid subscriptions or expanded customer relationships, we will not realize the intended benefits of this marketing effort, and our ability to grow our business and revenue may be harmed.

We may not be able to raise additional capital on acceptable terms, if at all, or without dilution to our stockholders, which could limit our ability to grow our business and expand our operations.

Our working capital requirements in the foreseeable future are subject to numerous risks and will depend on a variety of factors. We may seek additional funding to finance our operations or should we make acquisitions. We may also need to secure additional financing due to unforeseen or unanticipated market conditions. We may try to raise additional funds through public or private financings, strategic relationships, or other arrangements. Such financing may be difficult to

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obtain on terms acceptable to us, if at all. If we raise additional funds through the issuance of equity or convertible securities, then the issuance could result in substantial dilution to existing stockholders. If we raise additional funds through the issuance of debt securities or preferred stock, these new securities would have rights, preferences, and privileges senior to those of the holders of our common stock. In addition, the terms of these securities could impose restrictions on our operations. If we are not able to raise additional funds on terms acceptable to us, if and when needed, our ability to fund our operations, take advantage of opportunities, and develop or expand our business could be significantly limited.

Our provision may be insufficient to cover accounts receivable we are unable to collect.

We assume a certain level of credit risk with our customers in order to do business. Conditions affecting any of our customers have caused, and may in the future cause, them to become unable or unwilling to pay us in a timely manner, or at all, for products or services we have already provided. In the past, we have experienced collection delays from certain customers, and we may continue to experience similar or more severe delays in the future. Although we have established a provision to cover losses due to delays or inability to pay, there can be no assurance that such reserves will be sufficient to cover our losses. If losses due to delays or inability to pay are greater than our reserves, it could harm our business, operating results and financial condition.

If we acquire companies or technologies, we may not realize the expected business benefits, the acquisitions could prove difficult to integrate, disrupt our business and adversely affect our operations.

As part of our business strategy, we may periodically make investments in, or acquisitions of, if any, complementary businesses, joint ventures, services and technologies and intellectual property rights, and we expect that we will continue to evaluate such investments and acquisitions in the future. Acquisitions and investments involve numerous risks, including:

●	the potential failure to achieve the expected benefits of the combination or acquisition;

●	difficulties in and the cost of integrating operations, technologies, services and personnel;

●	diversion of financial and managerial resources from existing operations;

●	risks of entering new markets in which we have little or no experience or where competitors may have stronger market positions;

●	potential write-offs of acquired assets or investments, and potential financial and credit risks associated with acquired customers;

●	potential loss of key employees;

●	inability to generate sufficient revenue to offset acquisition or investment costs;

●	the inability to maintain relationships with customers and partners of the acquired business;

●	the difficulty of transitioning the acquired technology onto our existing platforms and integrating such technology in a manner consistent with our security, privacy and other operational standards;

●	potential unknown liabilities associated with the acquired businesses;

●	unanticipated expenses related to acquired technology and its integration into existing technology;

●	negative impact to our results of operations because of the depreciation and amortization of amounts related to acquired intangible assets, fixed assets and deferred compensation, and the loss of acquired deferred revenue and unbilled deferred revenue;

●	delays in customer purchases due to uncertainty related to any acquisition;

●	the need to implement controls, procedures and policies at the acquired company;

●	challenges caused by distance, language and cultural differences;

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●	in the case of foreign acquisitions, the challenges associated with integrating operations across different cultures and languages and any currency and regulatory risks associated with specific countries; and

●	the tax effects of any such acquisitions.

If we are unable to successfully identify, complete and integrate acquisitions or investments, or if we fail to realize the anticipated benefits of any such transaction, our business, financial condition and results of operations could be adversely affected.

We may be subject to legal liability and/or negative publicity for the services provided to consumers through our technology platforms.

Our technology platforms enable representatives of our customers as well as individual service providers to communicate with consumers and other persons seeking information or advice on the Internet. We may have limited ability to control the information, advice or other content transmitted through our platforms by our customers or their users. Users of our technology platforms may provide negligent, unlawful or otherwise inappropriate information or content through our technology platforms, or otherwise engage in unlawful conduct, and we may be subject to claims or regulatory scrutiny arising from such activities.

Claims could be made against providers of online services under both U.S. and foreign law based on fraud, defamation, libel, invasion of privacy, negligence, copyright or trademark infringement, or other theories relating to content or activities occurring through their services. Laws governing online platforms, intermediary liability, user-generated content and content moderation continue to evolve in the United States and internationally, and changes in these laws or their interpretation could increase our potential liability or compliance obligations. Our defense of any of these actions could be costly and involve significant time and attention of our management and other resources.

Certain U.S. laws provide limitations on liability for qualifying online service providers. For example, Section 512 of the Digital Millennium Copyright Act (DMCA) provides limitations on liability for certain copyright claims if applicable statutory requirements are satisfied. We cannot assure that these protections will apply to us in any particular circumstance or that we will satisfy all requirements necessary to qualify for applicable safe harbors. If these protections are unavailable, narrowed or otherwise limited, we could face increased exposure to claims, litigation, regulatory scrutiny and associated costs.

Security incidents have become more prevalent across industries and the methods and techniques used by threat actors continue to evolve at a rapid pace, including through the use of artificial intelligence and other increasingly sophisticated tools. We have experienced, and may continue to experience, cybersecurity threats and incidents affecting or targeting our systems. We may be unable to identify current attacks, anticipate these attacks or implement adequate security measures. Our service involves the storage and transmission of customers’ proprietary information, and security incidents could expose us to a risk of loss of this information, loss of access, litigation and possible liability. While we have security measures in place that are designed to protect customer information and prevent data loss and other security breaches, these security measures may be breached as a result of third-party action, including intentional misconduct by computer hackers (which may involve nation states and individuals sponsored by them), employee error, malfeasance or otherwise and result in someone obtaining unauthorized access to our customers’ data or our data, including our intellectual property and other confidential business information, or our IT systems. Additionally, third-parties have attempted, and may continue to attempt, through phishing, social engineering or otherwise, to fraudulently induce employees or customers into disclosing sensitive information such as usernames, passwords or other information in order to gain access to our customers’ data or our data or IT systems.

Vulnerabilities introduced through employee or contractor actions, software defects or third-party systems have in the past, and may in the future, be exploited to compromise our IT environments. These cybersecurity attacks threaten to misappropriate our proprietary information, cause interruptions of our IT services and commit fraud. If unauthorized access

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or sabotage remains undetected for an extended period of time, the effects of such incidents could be exacerbated. In addition, our ability to defend against and mitigate cyberattacks depends in part on prioritization decisions that we and third parties upon whom we rely on to address vulnerabilities and security defects. While we endeavor to address all identified vulnerabilities in our products, we may be unable to remediate all vulnerabilities before they are exploited.

In addition, our customers may authorize third-party access to their customer data located in our cloud environment. Because customer-authorized third parties may access, transmit or process such data outside our direct control, security incidents involving those third parties could nevertheless result in claims, disputes or reputational harm to us.

Cybersecurity attacks could require significant expenditures of our capital and diversion of our resources. If these attacks are successful, they could result in the theft of proprietary, personally identifiable, confidential and sensitive information of ours, our employees, our customers and our business partners, and could materially disrupt business for us, our customers and our business partners. A successful cybersecurity attack involving our cloud infrastructure, networks or software products could also negatively impact the market perception of the effectiveness of our products or lead to contractual disputes, litigation or government regulatory action against us, any of which could materially adversely affect our business, reputation and resulting operations.

We may also experience disruptions, outages, and other performance problems on our systems due to denial-of-service attacks, unauthorized access, or other security-related incidents. For example, third parties may conduct attacks designed to temporarily deny customers access to our services. Any successful denial of service attack could result in a loss of customer confidence in the security of our platform and damage to our brand.

Any security incidents could negatively affect our ability to attract new customers, cause existing customers to elect to not renew their subscriptions, result in reputational damage or subject us to third-party lawsuits, regulatory fines, or other action or liability, which could adversely affect our operating results. These risks are likely to increase as we continue to grow the scale and functionality of our platform and process, store, and transmit increasingly large amounts of our customers’ information and data, which may include proprietary or confidential data or personal or identifying information.

We transfer personal data from the European Economic Area (EEA), the United Kingdom, and Switzerland to the U.S. Historically, these transfers relied on the U.S.-EU and U.S.-Swiss Safe Harbor Frameworks and their successors, the EU-U.S. and Swiss-U.S. Privacy Shield Frameworks, which were subsequently invalidated or determined to be inadequate by the relevant authorities. We have self-certified to the EU-U.S. Data Privacy Framework (EU-U.S. DPF), the UK extension to the EU-U.S. DPF (UK DPF Extension), and the Swiss-U.S. DPF, which serve as the current lawful transfer mechanisms for personal data transfers to the U.S. from the EEA, the United Kingdom, and Switzerland, respectively. Like their predecessors, these frameworks remain subject to legal challenge, and the European Commission may suspend, amend, or limit their scope. In addition to our DPF certifications, we rely on standard contractual clauses (SCCs) approved by the European Commission as a supplementary transfer mechanism. These developments regarding cross-border data transfers have created uncertainty and increased the risk around our international operations and may require us to review and amend the legal mechanisms by which we make or receive personal data transfers to the U.S. and other jurisdictions. We may, among other things, be required to implement additional contractual and technical safeguards for any personal data transferred out of the EEA, Switzerland, the United Kingdom or other regions which may increase compliance costs, lead to increased regulatory scrutiny or liability, may require additional contractual negotiations, and may adversely impact our business, financial condition and operating results.

We have also experienced, and may continue to experience, increased customer scrutiny and contractual requirements relating to international data transfers and data localization. Certain European or multi-national customers may be hesitant or unwilling to use services that involve transfers of personal data to the United States or may require data to be stored or processed within particular jurisdictions. Satisfying such requirements may require additional infrastructure, contractual commitments or operational changes and could increase our costs or lengthen sales cycles.

We publicly post our privacy policies and practices concerning our processing, use and disclosure of personal information. If our actual practices are inconsistent, or are alleged to be inconsistent, with these statements or applicable privacy

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requirements, we could be subject to potential governmental or regulatory action, litigation, contractual claims or reputational harm. Further, the costs of compliance with, and other burdens imposed by, such laws, regulations and policies that are applicable to us may limit the use and adoption of our products and solutions and could have a material adverse impact on our results of operations.

We are subject to a growing number of federal, state and foreign laws, regulations and standards governing data privacy, cybersecurity and the collection, processing, storage, use and transfer of personal information. These requirements are evolving rapidly and have increased, and may continue to increase, our compliance obligations, operational complexity and costs. Unfavorable laws, regulations, or interpretations could limit demand for our services, increase compliance costs, or restrict our ability to offer our services and solutions in certain locations. Although we have implemented contracts, diligence programs, policies and procedures designed to address compliance with applicable laws and regulations, there can be no assurance that our employees, contractors, partners, suppliers, data providers or agents will not violate such laws and regulations or our contracts, policies and procedures. Additionally, public perception and standards related to the privacy of personal information can shift rapidly, in ways that may affect our reputation or influence legislators to enact regulations and laws, or regulators to enforce such laws or issue guidance, in each case that may limit our ability to provide certain products and services.

In the U.S., the California Consumer Privacy Act (CCPA), as amended by the California Privacy Rights Act (CPRA) provides California residents with expanded rights regarding personal information and imposes significant compliance obligations. The CCPA also applies to our collection and use of personal information relating to personnel. This may require separate compliance workflows for personnel data, increasing our administrative burden and compliance costs. In addition, numerous other states have adopted comprehensive privacy laws with varying requirements and enforcement mechanisms, including obligations related to sensitive personal information, data subject rights, and cybersecurity programs. Compliance with these laws increases operational complexity and costs, and failure to comply could result in investigations, fines, litigation, contractual liability, or reputational harm.

Internationally, global “digital” regulations continue to develop and evolve, including the EU’s GDPR, ePrivacy Directive, Network and Information Systems 2 Directive, Digital Operational Resilience Act, Cyber Resilience Act, Data Act, and Digital Services Act. In addition, India’s Digital Personal Data Protection Act, 2023 (DPDP Act), with implementing rules notified in November 2025 and substantial compliance obligations scheduled to take effect in May 2027, applies to certain processing of digital personal data in India and to processing outside India in connection with offering goods or services to individuals in India. We will continue to monitor developments related to existing and new “digital” laws which will require us to incur additional costs and expenses in an effort to monitor and comply with such laws. In addition to costs involved in monitoring and analyzing such laws to determine to what extent they apply, and costs involved in any compliance measures, there are also financial risks in the event of enforcement action, with many imposing penalties for noncompliance. Further, to the extent that any new laws may limit our ability to provide our solutions to customers, our business, financial condition, and operating results could be adversely affected.

At the U.S. state level, states have enacted AI-specific regulations that may impose obligations on both developers and deployers of AI systems. Colorado Senate Bill 26-189, which replaces the prior Colorado AI Act and is scheduled to take effect on January 1, 2027, and California’s regulations governing Automated Decisionmaking Technology (ADMT) under the CCPA, with relevant requirements beginning January 1, 2027, may impose obligations relating to transparency, disclosures, risk assessments and individual rights, depending on how AI technologies are developed and used. Depending on the nature of our AI offerings and our use of AI technologies, certain requirements may apply to us or our customers. Compliance with these requirements could increase costs, limit the functionality or availability of our solutions, or otherwise adversely affect our business.

In addition to government activity, privacy advocacy and other industry groups have established or may establish new self-regulatory standards that may place additional burdens on us. Our customers expect us to meet voluntary certification or other standards established by third parties, such as TRUSTe and other privacy, security and compliance frameworks. If

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we are unable to maintain these certifications or meet these standards, it could adversely affect our ability to provide our solutions to certain customers and could harm our business.

The costs of compliance with and other burdens imposed by laws, regulations and standards have increased, and may continue to increase, our costs and operational requirements and may limit the use and adoption of our service and reduce overall demand for it, or lead to significant fines, penalties or liabilities for any noncompliance.

Furthermore, concerns regarding data privacy may cause our customers’ customers to resist providing the data necessary to allow our customers to use our service effectively. Even the perception that the privacy of personal information is not satisfactorily protected or does not meet regulatory requirements could inhibit sales of our products or services, and could limit adoption of our subscription solution. Moreover, as our customers face increased scrutiny for data privacy breaches, they have sought, and may continue to seek, to allocate additional privacy and cybersecurity risk to us through contractual requirements, indemnities and liability provisions, which may increase our contractual exposure.

Issues in the development and use of AI may result in reputational or competitive harm or liability.

We are integrating AI into several of our offerings and anticipate significant growth in this area. However, like many innovations, AI comes with risks and challenges that could impact its adoption and our business. These may include flawed algorithms or training methods, inadequate or biased datasets and outputs, hallucinations, concept drift, and harmful, misleading, or unlawful content that may be generated by AI systems. AI systems may be deployed without adequate human oversight, particularly in customer service contexts. These risks may be heightened in regulated industries, including financial services, insurance, healthcare and telecommunications, where inaccurate AI outputs could result in customer harm, regulatory scrutiny, legal claims or reputational damage. Although customers generally control how they deploy and use our AI-enabled solutions, we may nevertheless face claims, disputes or reputational harm arising from their use. Poor development or deployment practices could undermine customer confidence, hinder AI acceptance, cause harm, or result in products not performing as intended.

The regulatory environment for AI is evolving rapidly. Laws and regulations, including the EU AI Act and emerging U.S. federal, state and international requirements, may impose obligations relating to transparency, documentation, risk assessment, monitoring and mitigation. Compliance with these evolving laws and regulations could increase our costs, and any failure to comply may harm our reputation, customer trust, operations, and financial condition. AI applications may also raise ethical, privacy, employment and other societal concerns that could adversely affect customer adoption and demand for our solutions.

We also rely in part on third-party AI technologies, such as those provided by OpenAI and other partners. Disruptions, errors, regulatory restrictions or changes in the availability or commercial terms of these technologies could impair our ability to provide AI-enabled solutions.

Regulatory authorities, including the FTC and state attorneys general, may investigate or take enforcement action concerning AI-related consumer harm, unfair or deceptive practices, or algorithmic discrimination. Such action involving us, our customers, or our AI-enabled solutions could increase compliance costs, restrict our operations, or result in penalties, litigation, or reputational harm.

These risks, individually or collectively, could materially adversely affect our business, financial condition and operating results.

Anti-corruption, anti-bribery, and similar laws, and failure to comply with these laws, could subject us to criminal penalties or significant fines and harm our business and reputation.

We are subject to anti-corruption and anti-bribery and similar laws, such as the U.S. Foreign Corrupt Practices Act of 1977, as amended, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the UK Bribery Act 2010, and other applicable laws in the countries in which we conduct activities. These laws are interpreted broadly and generally prohibit companies and their employees, agents and other intermediaries from promising, authorizing, making or offering improper payments or other benefits to government officials and, in some jurisdictions, private parties. As we conduct

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business internationally and engage with customers, partners, resellers and other third parties in multiple jurisdictions, we face compliance risks under these laws, which may increase as our international business expands. We have implemented policies and procedures designed to promote compliance with applicable anti-corruption and anti-bribery laws, but we cannot assure that our employees, agents, partners or other third parties will always comply with such requirements. Noncompliance with these laws could subject us to investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, adverse media coverage, and other consequences. Any investigations, actions, or sanctions could harm our business, operating results, and financial condition.

Industry-specific regulation is evolving and unfavorable industry-specific laws, regulations or interpretive positions could limit our ability to provide services and harm our business.

Our customers and potential customers conduct business in a variety of industries, including financial services, the public sector, healthcare, telecommunications and other highly regulated industries. Regulators in certain industries have adopted and continue to adopt and interpret regulations and guidance regarding the use of cloud computing, AI and other outsourced services. The costs of compliance with, and other burdens imposed by, industry-specific laws, regulations and interpretive positions have affected, and may continue to affect customers’ use and adoption of our services and reduce overall demand for our services. For example, some financial services regulators have imposed guidelines for use of cloud computing services that mandate specific controls or require financial services enterprises to obtain regulatory approval prior to outsourcing certain functions. If we are unable to comply with these guidelines or controls, or if our customers are unable to obtain regulatory approval to use our service where required, our business may be harmed. Our business is also subject to an evolving and increasingly complex regulatory environment relating to AI, cybersecurity, outsourcing and data governance, including the EU Artificial Intelligence Act, Network and Information Systems 2 Directive, and Digital Operational Resilience Act in the EU, as well as U.S. and international regulatory requirements and frameworks applicable to AI and cloud services. These developments have resulted, and may continue to result, in increased customer diligence, contractual requirements and requests for additional controls, transparency, documentation and monitoring. We may be faced with questions and additional requirements from customers, and compliance may require us to implement additional controls, transparency measures, or monitoring obligations. In addition, an inability to satisfy certain certification, authorization or compliance frameworks that our customers may require or expect, such as an attestation of compliance with the PCI Data Security Standards, requirements applicable under HIPAA, FEDRAMP requirements or similar frameworks, may adversely affect our ability to provide services to certain customers. Requirements under these frameworks continue to evolve, and maintaining compliance or applicable certifications or authorizations may require significant resources. If we are unable to achieve or maintain these industry-specific certifications or other requirements or standards relevant to our customers, it could adversely affect our ability to provide our services to certain customers and harm our business.

In some cases, industry-specific laws, regulations or interpretive positions may also apply directly to us as a service provider. Any failure or perceived failure by us to comply with such requirements could have an adverse impact on our business.

We face risks related to pandemics and public health emergencies which could have a material adverse effect on our business, financial condition and results of operations.

Pandemics, such as the COVID-19 pandemic, and other public health emergencies, have caused, and may in the future cause, disruptions to businesses, financial markets and economic activity globally and in the United States. Such events have affected, and may in the future affect, our business and the businesses of our customers, partners and vendors, including through reduced or delayed technology spending, slower purchasing decisions, lengthened sales cycles, pressure on pricing and payment terms, disruptions to workforce availability and operations, increased cybersecurity risks, and volatility in foreign currency exchange rates and financial markets. The scope and duration of future pandemics or public health emergencies, and the governmental, business and societal responses to them, are inherently uncertain. Any significant outbreak or related disruption could adversely affect our operations, customer demand, revenue, operating results, cash flows and financial condition.

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Changes to current accounting policies could have a significant effect on our reported financial results or the way in which we conduct our business.

Generally accepted accounting principles (GAAP) and the related accounting pronouncements, implementation guidelines and interpretations for some of our significant accounting policies are highly complex and require subjective judgments and assumptions. We have been, and may continue to be, required to modify our accounting policies, judgments, estimates or disclosures as a result of changes in GAAP, new accounting pronouncements or evolving interpretations and implementation guidance. Some of our more significant accounting policies that require significant judgment or could be affected by such changes include:

●	recognition of revenue, including royalty revenue under our OEM arrangements;

●	contingencies and litigation; and

●	accounting for income taxes.

Changes in these or other rules, or scrutiny of our current accounting practices, or a determination that our judgments or assumptions in the application of these accounting principles were incorrect, could have a significant adverse effect on our reported operating results or the way in which we conduct our business.

The U.S. government has implemented, and continues to consider and modify, significant changes to its trade policies, including tariffs, trade restrictions and potential changes to existing trade arrangements, resulting in a dynamic and uncertain trade environment. Such measures can be adopted with little or no notice, and retaliatory actions by other countries have occurred and may continue to occur, further increasing costs and disrupting global supply chains. Higher tariffs or trade restrictions have increased, and may continue to increase, the cost of products sold by our customers, vendors, partners, and suppliers, reducing demand, compressing margins, and impairing their financial performance and ability to meet obligations. This, in turn, could adversely impact our financial condition and results of operations. Tariffs or other trade restrictions have also contributed to, and may continue to contribute to continuing uncertainty and volatility in U.S. and global financial markets and economic conditions. Disruptions and volatility in the financial markets may lead to adverse changes in the availability, terms and cost of capital, all of which could have a material adverse effect on our business, financial condition, results of operations and prospects.

Geopolitical instability, including the military conflict involving Iran and broader escalation in the Middle East, could adversely affect our business, financial condition, and results of operations.

The ongoing conflict involving the United States and Iran has disrupted, and may continue to disrupt, global markets, energy supplies and transportation routes, increase energy and operating costs, heighten cybersecurity risks and contribute to volatility in customer spending and enterprise technology budgets. Broader sanctions, trade restrictions, supply chain disruptions, or instability affecting customers, partners, vendors, and cloud infrastructure providers have created, and may continue to create, economic and operational uncertainty and could delay purchasing decisions, reduce demand for our solutions, impair collections, and disrupt business operations. Any prolonged geopolitical instability or related economic downturn could have a material adverse effect on our business, financial condition, and results of operations.

Risks Related to Intellectual Property

We have been and may in the future be sued by third parties for various claims including alleged infringement of proprietary rights that can be time-consuming, incur substantial costs, and divert the attention of management, which could adversely affect our operations and cash flow.

We are, and may in the future be, subject to claims, lawsuits, and other proceedings in the ordinary course of business, including those involving alleged infringement of third-party patents and other intellectual property rights, and commercial, labor and employment, and other matters.

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The software and Internet industries are characterized by the existence of a large number of patents, trademarks and copyrights and by frequent litigation based on allegations of infringement or other violations of intellectual property rights. We have received and may receive in the future communications from third parties claiming that we or our customers have infringed the intellectual property rights of others. In addition, we have been, and may in the future be, sued by third parties for alleged infringement of their claimed proprietary rights. Our technologies and those of our customers may be subject to injunction if they are found to infringe the rights of a third-party or we may be required to pay damages, or both. Many of our customer agreements require us to indemnify our customers against third-party intellectual property infringement claims, which would increase the cost to us of an adverse ruling on such a claim.

The outcome of any litigation, regardless of its merits, is inherently uncertain. Any claims and lawsuits, and the disposition of such claims and lawsuits, could be time-consuming and expensive to resolve, divert management attention from executing our business plan, lead to attempts on the part of other parties to pursue similar claims and, in the case of intellectual property claims, require us to change our technology, change our business practices or pay monetary damages, or enter into short- or long-term royalty or licensing agreements.

Any adverse determination related to intellectual property claims or other litigation could prevent us from offering our service to customers, could be material to our financial condition or cash flows, or both, or could otherwise adversely affect our operating results. In addition, depending on the nature and timing of any such dispute, a resolution of a legal matter could materially affect our future results of operation or cash flows or both.

We rely on trademark, copyright, trade secret laws, contractual restrictions and patent rights to protect our intellectual property and proprietary rights and, if these rights are impaired, then our ability to generate revenue will be harmed.

If we fail to protect our intellectual property rights adequately, our competitors might gain access to our technology, and our business might be harmed. In addition, defending our intellectual property rights might entail significant expense. Any of our trademarks or other intellectual property rights may be challenged by others or invalidated through administrative process or litigation. While we have some U.S. patents and pending U.S. patent applications, we may be unable to obtain patent protection for the technology covered in our patent applications. In addition, our existing patents and any patents issued in the future may not provide us with competitive advantages, or may be successfully challenged by third parties. Furthermore, legal standards relating to the validity, enforceability and scope of protection of intellectual property rights are uncertain. Effective patent, trademark, copyright and trade secret protection may not be available to us in every country in which our service is available. The laws of some foreign countries may not be as protective of intellectual property rights as those in the U.S., and mechanisms for enforcement of intellectual property rights may be inadequate. Accordingly, despite our efforts, we may be unable to prevent third parties from infringing upon or misappropriating our intellectual property.

We have incurred, and may in the future incur, significant resources to monitor and protect our intellectual property rights. We may initiate claims or litigation against third parties for infringement of our proprietary rights or to establish the validity of our proprietary rights. Any litigation, whether or not it is resolved in our favor, could result in significant expense to us and divert the efforts of our technical and management personnel.

Our failure or inability to develop non-infringing technology or license proprietary rights on a timely basis would harm our business.

We have been, and may in the future be, subject to legal proceedings and claims from time to time in the ordinary course of our business, including claims of alleged infringement of the patents and other intellectual property rights of third parties. Our products may inadvertently infringe on issued patents or other intellectual property rights held by third parties, including rights arising from patent applications that were not publicly available when relevant products or technologies were developed. Intellectual property litigation is expensive, time consuming, and could divert management’s attention away from running our business. Litigation could also require us to develop non-infringing technology or enter into royalty or license agreements. These royalty or license agreements, if required, may not be available on acceptable terms, if at all, in the event of a successful claim of infringement.

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General Risk Factors

Our stock price has demonstrated volatility and continued market conditions may cause declines or fluctuations.

The price at which our common stock trades has been, and will likely continue to be, highly volatile and subject to wide fluctuations due to factors such as the following:

●	concerns related to liquidity of our stock;

●	actual or anticipated fluctuations in our operating results, our ability to meet announced or anticipated revenue and/or profitability goals and changes in or failure to meet securities analysts’ expectations;

●	changes in our AI customer metrics, the pace of our business transition, and our ability to achieve our announced long-term financial targets;

●	the level of securities analyst coverage of our company and changes in analyst recommendations or price targets;

●	announcements of technological innovations and/or the introduction of new services by us or our competitors;

●	developments with respect to intellectual property rights and litigation, regulatory scrutiny and new legislation;

●	market developments and changing investor expectations relating to customer engagement platforms, AI solutions and the broader technology industries; and

●	general market and economic conditions.

Furthermore, the stock market has experienced significant price and volume fluctuations that have affected, and may continue to affect, the market prices for the common stock of technology companies, regardless of the specific operating performance of the affected company. These broad market fluctuations may cause the market price of our common stock to decline.

Our insiders who are significant stockholders have the ability to exercise significant control over matters requiring stockholder approval, including the election of our Board of Directors, and may have interests that conflict with those of other stockholders.

Our directors and executive officers, together with their affiliates and members of their immediate families, beneficially owned, in the aggregate, approximately 38% of our outstanding capital stock as of September 30, 2026, of which our Chief Executive Officer, Ashutosh Roy, beneficially owned approximately 34% as of such date. As a result of these concentrated holdings, Mr. Roy individually or together with this group has the ability to exercise significant control over most matters requiring our stockholders’ approval, including the election and removal of directors and the approval of significant corporate transactions, such as a merger or sale of our company or its assets. The amounts of common stock beneficially owned by our directors and executive officers, including Mr. Roy, increase as a result of stock repurchases by us pursuant to our stock repurchase program.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On November 14, 2022, eGain’s Board of Directors authorized a stock repurchase program under which the Company may purchase up to $20 million of its own outstanding common stock. In May 2024 and again in September 2025, the Board of Directors approved a $20 million increase in its stock repurchase program, bringing the aggregate amount eGain may purchase thereunder from $20 million to $60 million of its outstanding common stock. As of September 30, 2026, approximately $6.0 million, including associated trading fees and estimated taxes, remained available for stock repurchases pursuant to our stock repurchase program.

The timing and number of shares repurchased will be determined based on an evaluation of market conditions and other factors, including stock price, trading volume, general business and market conditions, and the availability of capital. On September 3, 2025, the Board of Directors also approved an extension of the stock repurchase program until the earlier of (i) the date the aggregate amount of shares that can be repurchased under the stock repurchase program has been repurchased and (ii) the date the Board of Directors decides to terminate the stock repurchase program. The stock repurchase program does not obligate us to acquire a specified number of shares and may be modified, suspended, or discontinued at any time at our discretion without notice. The stock repurchase program will be funded using existing cash or future cash flows. We intend to reissue repurchased shares at a later date and therefore carry the shares as treasury stock, at cost.

The following table summarizes the stock repurchase activity for the three months ended September 30, 2026, and the approximate dollar value of shares that may yet be purchased pursuant to our stock repurchase program:


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program (in thousands)
July 1, 2026 to July 31, 2026	—	$	—	—	$	9,678
August 1, 2026 to August 31, 2026	—	$	—	—	$	9,678
September 1, 2026 to September 30, 2026	644,366	$	5.64	644,366	$	6,041
Total	644,366			644,366

Item 5. Other Information

(c) Trading Plans

During the three months ended September 30, 2026, no director or Section 16 officer adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements (in each case, as defined in Item 408(a) of Regulation S-K).

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Item 6. Exhibits


Exhibits No.		Description of Exhibits
31.1˄		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.

31.2˄		Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.

32.1*		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002 of Ashutosh Roy, Chief Executive Officer.

32.2*		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002 of Eric N. Smit, Chief Financial Officer.

101		Interactive Data Files Pursuant to Rule 405 of Regulation S-T, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets as of September 30, 2026 and June 30, 2026, (ii) Condensed Consolidated Statements of Operations for the three months ended September 30, 2026 and 2025, (iii) Condensed Consolidated Statements of Comprehensive Income for the three months ended September 30, 2026 and 2025, (iv) Condensed Consolidated Statements of Stockholders’ Equity for the three months ended September 30, 2026 and 2025, (v) Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 2026 and 2025 and (vi) Notes to Condensed Consolidated Financial Statements.

101.INS		Inline XBRL Instance Document

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

˄Filed herewith.

In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Exchange Act or deemed to be incorporated by reference into any filing under the Exchange Act or the Securities Act except to the extent that the registrant specifically incorporates it by reference.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Dated: November 13, 2026	eGain Corporation

	By	/s/ Eric N. Smit
		Eric N. Smit
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

Source: View Original Filing on SEC EDGAR

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