EGAIN Corp: Form 10-K for the period ended Jun 30, 2026

Overview

eGain powers AI-driven knowledge management for the enterprise. We sell our SaaS platform to enterprises that want to deliver trusted, consumable answers to customers, employees, and AI agents — aiming to reduce cost and improve outcomes across knowledge-intensive workflow. Our platform centralizes enterprise knowledge and puts it to work across customer service, employee support, and AI-powered automation. We are headquartered in Sunnyvale, California, USA. We also operate in the United Kingdom and India.

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. Our solutions are used by large enterprises and government organizations across North America and Europe.

Industry Background

Introduction

Our assessment, based on more than two decades of serving clients, is that good contact center agents ignore most information piled on their screens across multiple windows and tabs when they are interacting with customers. They focus on the customer conversation. Meanwhile, businesses expect agents to remember and refresh growing know-how that is needed to answer customer questions across complex, expanding product portfolios and compliance-heavy processes, and then recall it contextually in the moment of truth, when the customer is on the line. In addition, this is expected of an entry-level workforce that is not well-paid, routinely replaced, and globally dispersed, mainly for cost reasons. This knowledge and guidance gap helps explain why Gartner has identified knowledge management systems, alongside live chat and self-service portals, as essential tools for fast, scalable support, and why 58% of customer service leaders in a Gartner survey published in December 2025 said they plan to upskill agents into knowledge management specialists.

AI Economy Demands Modern Knowledge Management

In a world selling commoditized, yet complex products to time-strapped customers, smart tools must increasingly automate self-service interactions and augment agent-assisted customer experiences. In a hybrid workplace, businesses realize that they need to invest in tools that can guide agents and customers with trusted answers, ensuring compliance. Further, AI investments are struggling to deliver value at scale because of the “Garbage In Garbage Out” problem of fragmented knowledge content across an enterprise. We believe the answer is a centralized knowledge hub, a single source of truth that is powered by AI and orchestrated by experts in the loop. Gartner expects this shift to accelerate, predicting that by 2028, 40% of large enterprises will adopt AI-powered customer service knowledge automation, up from less than 5% in 2025.

AI Knowledge for Customer Engagement

To automate customer engagement, generative AI needs trusted content from a knowledge hub that ensures correct, compliant content is served with adequate controls. A knowledge hub can be built and maintained with much less time and cost using AI. It is a perfect technology bootstrap - AI needs trusted knowledge as input and trusted knowledge can be built much easier using AI.

Contact Centers are a Brand Battleground

Contact centers offer a great opportunity within any business operation to automate using AI. According to Forrester Research, there are roughly 15 million contact center agents working globally in 2026. Time-starved customers consuming complex products and grappling with extreme choices generate stubbornly high levels of customer contact. They need quick, correct, and assured help. Gartner predicts that by 2029, agentic AI will autonomously resolve 80% of common customer service issues without human intervention, leading to a 30% reduction in operational costs.

Customer Experience Automation is a Large, Growing Market

Businesses continue to invest in digital transformation, especially in customer experience. To further reduce cost and improve experience, businesses want to harness AI knowledge to automate customer service via omnichannel, conversational interfaces. According to McKinsey, the aggregate cost of customer operations in the global economy is $1.5 trillion, and businesses could reduce this cost by 35% using AI. Gartner predicts that by 2028, over 50% of customer service organizations will double their technology spend, and in a Gartner survey published in February 2026, 91% of customer service leaders reported executive pressure to implement AI in 2026. Realizing this opportunity depends on foundations that many enterprises have not yet built. Gartner predicts that over 40% of agentic AI projects will be canceled by the end of 2027 due to escalating costs, unclear business value, or inadequate risk controls. We believe a governed, centralized knowledge foundation is what separates the AI projects that succeed from those that do not.

The eGain Approach and Benefits

What Customers Want

We believe customer service queries fall into three categories: informational, transactional, and situational. A customer contact could span one or more of these three categories as the conversation develops. Tools must orchestrate customer contact with context, accounting for machine-human hand-offs (mixed-initiative interaction), channel switching, multimodal interaction, and conversational pause-and-resume. During these interactions, customers increasingly want guidance and trusted answers.

The eGain Solution is Comprehensive

eGain offers a comprehensive solution organized into three hubs, eGain AI Agent™, eGain AI Knowledge Hub™, and eGain Conversation Hub™, to automate customer experiences. In fiscal year 2026, we extended this portfolio with eGain AI Agent 2™ with Assured Actions™, eGain Composer™, our modular AI knowledge development platform, Agentic Studio™ for multi-agent orchestration, and eGain Evaluator™ for continuous quality assurance of AI-generated answers.

eGain AI Agent helps businesses easily deploy enterprise-grade agentic solutions built on trusted knowledge and guided actions. Our AI Agent for contact center assists human agents by actively listening to customer conversations and proactively guiding them step-by-step, across intent identification, issue resolution and contact wrap up. Our AI Agent is available for leading contact center platforms, including Amazon Connect, Cisco Webex Contact Center, Genesys, Salesforce, and Zoom Contact Center.

eGain AI Knowledge Hub helps businesses to centralize knowledge, policies, procedures, situational expertise, and best-practices, while delivering guided, personalized, and trusted answers to customers, agents, and field staff. We believe our guided knowledge applications help agents handle contacts consistently regardless of tenure or expertise, and shorten the time it takes new agents to reach competence.

eGain Conversation Hub offers comprehensive, scalable capabilities for digital-first interaction management within a modern, omnichannel desktop. Human agents are proactively guided by AI knowledge to efficiently serve customers via chat, short message service (SMS), email, social media, phone, video, fax, and letter.

Open, Secure APIs and Third-Party Connectors Deliver Quick Value

Our open, secure platform APIs enable clients and partners to extend and enhance our solutions and to integrate with enterprise assets to enable a single view of the customer. Pre-built integrations include connectors to Adobe, Apple Business Chat, Atlassian Jira, Avaya, Amazon Connect, Cisco, Facebook Messenger, Five9, Google Dialogflow, Genesys, Talkdesk, IBM Watson, Microsoft Dynamics, Microsoft SharePoint, Microsoft Teams, Salesforce, SAP, ServiceNow, and Zendesk. In fiscal year 2026, we extended this architecture with connectors that support the Model Context Protocol (MCP), enabling enterprise AI platforms and development tools, including Microsoft Copilot, Anthropic Claude, and Google Gemini CLI, to retrieve governed answers from the eGain AI Knowledge Hub. We also released integrations for Microsoft Teams, Slack, and Zoom Team Chat to deliver knowledge in the flow of employee work. We offer a novel

“Bring Your Own” composable architecture to plug large language models, external bots, messaging channels, and third-party agent desktops to compose differentiated customer experiences.

Compelling Benefits

Our solution delivers quick value, easy innovation, and big business impact. Specifically, we help businesses:

• Enhance customer experience with digital-first, omnichannel service, powered by AI knowledge.
• Reduce operating costs with self-service automation, improved agent productivity and time-to-competence.
• Ensure compliance with regulations, policies, procedures, and best practices.
• Deliver insights to improve service, enhance products and design new offerings.

Competitive Strengths

Analyst-Recognized Leadership in AI Knowledge Management

In July 2026, Gartner named eGain a Leader in the Magic Quadrant for Customer Service Knowledge Management Systems, the first Magic Quadrant Gartner has published for this market, positioning eGain highest for Ability to Execute and furthest for Completeness of Vision. In the companion Critical Capabilities report, eGain received the highest product score of the eight vendors evaluated for the Compliance-Driven Service Center use case, and the second-highest score for the High-Volume Contact Center and Technical and Field Support use cases. In November 2025, Gartner rated eGain an Emerging Leader in its Emerging Market Quadrant for Generative AI Applications, published in the Innovation Guide for Generative AI Technologies. We believe this recognition reflects the depth of our knowledge management capability relative to both established application vendors and newer entrants.

Composable Platform with Rich APIs, Events, and UX Widgets

The eGain solution is a comprehensive omnichannel solution for the customer engagement market, with AI and knowledge applications at its core. We unlock the full power of our cloud platform with extensive APIs on a composable architecture, served via a developer portal to enable knowledge everywhere to power omnichannel customer and employee experiences.

Enterprise-Grade, Secure Cloud Service with Differentiated Offerings

Our cloud offering is secure, scalable, and offers unique capabilities. With respect to security and certification, we offer SOC2, PCI, HIPAA, FedRAMP, and GDPR certification. We are also approved as a supplier on Crown Commercial Service’s (CCS) G-Cloud Framework in the UK market. The Internal Revenue Service uses our solutions served from the eGain Cloud.

Transformative Value at Scale Across Diversified Customer Base

Our solution delivers transformative value at scale. We believe that our understanding of the customer need and our ability to fulfill it with enterprise-grade capability is unmatched. Our clients range from over a hundred thousand users at a healthcare client using our solution on a 24x7 basis to a Property and Casualty (P&C) insurer with fifteen thousand contact center advisors and thirty thousand field agents. Customers who have publicly announced their use of our solutions include Achmea, one of Europe's largest cooperative insurance and financial services groups, which deployed the eGain AI Knowledge Hub and eGain AI Agent to approximately 21,000 contact center and enterprise users; Cabinetworks Group; and Hackensack Meridian Health.

Market-leading Innovation with Risk-free Trial Models

To de-risk customer decisions, we offer both self-sign ups and guided pilots at no charge:

• AI Agent self-signup with free trial.
• Innovation in 30 Days™ program—a 30-day guided pilot in the eGain Cloud – at no cost and no strings attached. Businesses can experience our product with their data, content, and process in a production setting.

Direct Go-to-market Strategy, Complemented by a Growing Partner Ecosystem

We take our solutions to market through a direct sales model, primarily in North America and Western Europe. We complement direct sales with resell partnerships and with product integrations with leading contact center and CRM platform providers, including Amazon Connect, Cisco, Five9, Genesys, Salesforce, Talkdesk, and Zoom. We also partner with System Integrators and boutique consultants.

Customers

We mostly sell to large enterprises, which we define as businesses with over a billion dollars in annual revenue or government organizations. Over 89% of our total revenue for the fiscal year ended June 30, 2026 (which we refer to as fiscal year 2026) came from such large enterprises.

For fiscal year 2026, North America (NA) and combined Europe, Middle East, and Africa (EMEA) revenue accounted for 79% and 21% of total revenue.

One of our largest customers, who is also our partner, accounted for 15% of total revenue in fiscal year 2026.

In fiscal year 2026, we introduced “AI customers” as a customer-focused operating metric. We define AI customers as customers who actively utilize one or more of our AI offerings. This includes all offerings associated with a customer and not solely the AI offerings. Management believes adoption of our AI Knowledge solutions is an important indicator of customer engagement and is intended to help management evaluate customer adoptions, retention, and expansion trends.

Annual recurring revenue from our eGain AI customers was $54.3 million and $48.1 million during the fiscal years ended June 30, 2026 and 2025, respectively, which represented an increase of 13% or $6.2 million. Annual recurring revenue from our eGain AI customers represents 63% and 55% of total annual recurring revenue for the fiscal years ended June 30, 2026 and 2025, respectively.

Competition

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 face competition from providers of general-purpose generative AI platforms and from enterprises that elect to build knowledge and AI capabilities using internal resources.

Our target market is highly competitive and some of our competitors may have longer operating histories, greater economies of scale, greater financial resources, greater engineering and technical resources, greater sales and marketing resources, stronger strategic partnerships and distribution channels, larger user bases, products and services with different functions, and feature sets and greater brand recognition than we have. We believe the principal competitive factors in our market include the following:

• proven track record of customer success;
• speed and ease of implementation;
• quick value realization;
• rich product functionality;
• strong analyst ratings;
• strong customer references;
• financial stability and viability of the vendor;
• strong product adoption;
• ease of use and rates of user adoption;
• low total cost of ownership and demonstrable cost-effective benefits for customers;
• performance, security, scalability, flexibility and reliability of the service;
• ease of integration with existing applications;
• quality of customer support;
• availability and quality of implementation, consulting and training services; and
• vendor reputation and brand awareness.

Growth Strategy

We are investing in multiple programs to accelerate growth.

Advance Product and Platform Leadership

Innovation is in our DNA. We are investing actively in experimenting with, enhancing, and applying AI technologies to accelerate and automate tasks in the knowledge management and customer engagement lifecycle. In addition, we are expanding our platform connectivity to CRM, CCaaS, UCaaS, and CMS platforms with enhanced APIs and connectors.

Invest in Direct Sales and Marketing

We design and execute scalable and personalized marketing programs to boost brand awareness, based on client success, product leadership and no-risk trial offers. To complement our marketing investment, we have built and trained a field sales team to maintain high-touch presence in target accounts.

Develop New Partner Relationships

We are developing new partnerships with complementary platform providers (with large customer bases) to enhance their proposition with our Knowledge-powered customer engagement capabilities. At the same time, we are investing in delivery partnerships to scale our delivery capabilities.

Land and Expand in the Enterprise

With the sustained progress we have made in customer success, we see a replicable pattern emerging: land enterprise logos with a small footprint in one business unit, demonstrate business value, and then expand in the enterprise. We believe we are increasing the value of investment in eGain for our clients by deeply integrating our capabilities via our enhanced APIs with enterprise assets like enterprise collaboration platforms, CRM systems, transaction and billing, and content sources.

Selectively Pursue Acquisitions

From time to time, we pursue inorganic strategies to strengthen our product portfolio. As opportunities arise, we look for strategic acquisitions we believe will deliver compelling value faster than organic options.

Sales and Marketing

Sales Strategy

Our sales strategy is to pursue North America and Europe-based enterprises with more than five thousand employees, through a combination of direct sales and partners. These enterprises typically have thousands of customer service agents in their contact centers. Our direct sales force is organized into teams that include sales representatives and sales consultants. Our direct sales force is complemented by sales development representatives.

Marketing and Partner Strategy

Our brand is built around three pillars: thought leadership, product leadership, and customer advocacy. We have a long track record of thought leadership in this market. Our popular “Knowledge Management for Dummies” publication, for example, enjoys thousands of digital downloads and physical distribution in our target community. The revised second edition of this pioneering work incorporates generative AI updates, including relevant AI-powered product info, customer case studies, and best-practices. In June 2026, research on enterprise knowledge loss co-authored by eGain and Deloitte was published in Deloitte Insights.

Our partners help extend the breadth and depth of our product offerings, drive market awareness, and augment our professional service capabilities. We believe these relationships are important to deliver successful integrated products and services to our customers.

SaaS Services

Our SaaS services provide customers with access to our software on a cloud-based platform that we manage and offer on a subscription basis. These SaaS services allow our customers to easily consume our product innovation without dealing with infrastructure, installation and ongoing administration. We generally offer these services through a 36-month contract, with pricing based on the number of agents or self-service sessions.

Professional Services

Our worldwide professional services organization provides consulting, implementation, training, and managed services to deliver business value, drive customer success and build customer loyalty.

• Consulting and Implementation Services. Our offering includes rapid implementation services, platform-based solution extension, and systems integration services. Our consultants work with customers to understand their requirements, analyze their business needs, and implement effective solutions. We provide these services independently or in partnership with distribution partners who have developed expertise on our platform.
• Training Services. We provide comprehensive training options to customers and partners. Training programs are offered either online (remote training) or in-person at the customer site. We also offer complementary e-learning through our eGain University education portal to our customers and partners.
• Managed Services. We provide a comprehensive set of processes and activities that range from implementation to monitoring the evolution and support of eGain solutions in a company.

Customer Support

We offer 24/7 customer support via online and phone channels worldwide under support agreements. Our customer support centers are in the United States, the United Kingdom, and India.

Research and Development

The market for our products changes rapidly and is characterized by evolving industry standards, swift changes in customer requirements, and frequent product introductions. Automation of CX with AI is an exciting, global market opportunity that is being reimagined. We are investing heavily in product innovation to seize this opportunity in enterprises looking to drive impact at scale in CX, a critical business function.

We continuously analyze market and customer requirements and evaluate external technology that we believe will enhance our competitiveness, increase our lifetime customer value, and expand our target market. Our product roadmap effectively combines build, partner, and buy options.

Intellectual Property

We regard our intellectual property as critical to our success. We rely on intellectual property and other laws, in addition to confidentiality procedures and licensing arrangements, to protect the proprietary aspects of our technology and business.

As of June 30, 2026, we had 17 issued patents in the United States, including certain patents for which petitions for reinstatement are pending following the inadvertent nonpayment of maintenance fees. Our issued U.S. patents expire at various times between 2028 and 2040.

We continually assess the strength of our intellectual property protection for those aspects of our technology that we believe constitute innovations providing significant competitive advantages. Future applications may or may not receive the issuance of valid patents or registered trademarks.

We routinely require our employees, customers, and potential business partners to enter into confidentiality and nondisclosure agreements before we disclose any sensitive aspects of our products, technology, or business plans. In addition, we require employees to agree to surrender to us any proprietary information, inventions or other intellectual property they generate or come to possess while employed by us. Despite our efforts to protect our proprietary rights through confidentiality and license agreements, unauthorized parties may attempt to copy or otherwise obtain and use our products or technology. These precautions may not prevent misappropriation or infringement of our intellectual property. In addition, some of our license agreements with certain customers and partners require us to place the source code for our products into escrow. These agreements typically provide that some party will have a limited, non-exclusive right to access and use this code as authorized by the license agreement if there is a bankruptcy proceeding instituted by or against us, or if we materially breach a contractual commitment to provide support and maintenance to the party.

Human Capital

Our key human capital management objectives are to attract, retain and develop the highest quality talent. To support these objectives, our human resources programs are designed to develop talent to prepare them for critical roles and leadership positions for the future; reward and support employees through competitive pay and benefits; enhance our culture through efforts aimed at making the workplace more engaging and inclusive; and acquire talent and facilitate internal talent mobility to create a high-performing and diverse workforce. As of June 30, 2026, we had 422 employees, including 420 full-time employees, of which 197 were in product development, 128 in services and support, 56 in sales and marketing, and 41 in finance and administration.

None of our employees are covered by collective bargaining agreements. While we believe our relations with our employees are good, our future performance depends largely upon the continued service of our key technical, sales and marketing, and senior management personnel, none of whom are bound by employment agreements requiring service for a defined period of time.

Available Information

We were incorporated in Delaware in September 1997, and our website is located at www.egain.com (http://www.egain.com). We make available free of charge on our website, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports, as soon as reasonably practicable after we electronically file or furnish such materials to the Securities and Exchange Commission at www.sec.gov (http://www.sec.gov). Our website and the information contained therein or connected thereto are not intended to be incorporated into this Annual Report on Form 10-K.

Information About Our Executive Officers

The following table sets forth information regarding eGain’s executive officers as of September 10, 2026:

Ashutosh Roy co-founded eGain and has served as Chief Executive Officer and a Director of eGain since September 1997 and as President since October 1, 2003. From May 1995 through April 1997, Mr. Roy served as Chairman of WhoWhere? Inc., an Internet-services company co-founded by Mr. Roy. From June 1994 to April 1995, Mr. Roy worked at Parsec Technologies, a call center company based in New Delhi, India, which he co-founded. From August 1988 to August 1992, Mr. Roy worked as a software engineer at Digital Equipment Corporation, a major company in the computer industry at the time. Mr. Roy holds a B.S. in Computer Science from the Indian Institute of Technology, New Delhi, a Master’s degree in Computer Science from Johns Hopkins University and an M.B.A. from Stanford University.

Eric N. Smit has served as Chief Financial Officer since August 2002. Prior to that, Mr. Smit served in a variety of roles at eGain, including Vice President, Operations from April 2001 to July 2002, Vice President, Finance and Administration from June 1999 to April 2001, and Director of Finance from June 1998 to June 1999. From December 1996 to May 1998, Mr. Smit served as Director of Finance for WhoWhere? Inc., an Internet services company. From April 1993 to November 1996, Mr. Smit served as Vice President of Operations and Chief Financial Officer of Velocity Incorporated, a software game developer and publishing company. Mr. Smit holds a Bachelor of Commerce in Accounting from Rhodes University, South Africa.

Rao J. Chandrasekhar (also known as J.C. Rao) has served as Senior Vice President, Products and Services since September 2024. J.C. Rao joined the Company in August 1999 and has served in a variety of roles, including as Senior Vice President, Services, Support, and Operations from November 2022 to September 2024, and prior to that, other leadership roles in product management and engineering. J.C. Rao earned his Bachelor of Technology from Indian Institute of Technology Madras and M.S. from the University of Texas, Austin.

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

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.

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.

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;
• 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;
• 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 keeping pace with the market transition to SaaS solutions. 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 operating results and financial results will suffer.

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.

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.

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.

We derive a substantial portion of our revenue from sales to a relatively small number of customers. For the fiscal year ended June 30, 2026, our ten largest customers accounted for approximately 56% of our total revenue, compared with approximately 58% for the fiscal year ended June 30, 2025. Our largest customer accounted for approximately 15% and 16% of our total revenue for fiscal 2026 and fiscal 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 market for customer engagement software, including generative AI product offerings, is competitive, and our business will be adversely affected if we are unable to successfully compete.

The market for customer engagement software is intensely competitive. 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 with enterprises that develop knowledge management, AI and related capabilities using their own internal resources.

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.

We are also investing in AI across the entire company and integrating generative AI capabilities into our product and service offerings. AI technology and services are highly competitive and rapidly evolving markets. We have incurred, and expect to continue to incur, significant development and operational costs to build and support the generative AI capabilities, products, and services 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 adversely affected, and may continue to adversely affect, 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.

If we fail to expand and improve our sales performance and marketing activities, or retain our sales and marketing personnel, we may be unable to grow our business, which could negatively impact our operating results and financial condition.

Expansion and growth of our business is dependent on our ability to expand our sales force and on the ability of our sales force to increase sales. For example, we have experienced workforce reductions and turnover, and additional reductions or turnover may limit our capacity to develop and maintain awareness of our products in a cost-effective manner. This could hinder widespread adoption of our existing and future products and could result in a failure to expand and attract new customers and enhance relationships with existing customers. This could impede our efforts to improve operations in our other areas and may result in declines in the market price of our common stock.

Due to the complexity of our customer engagement hub 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 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.

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.

We derived 21% and 22% of our revenue from EMEA sales during the fiscal years ended June 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 war between 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 June 30, 2026, approximately 44% of our workforce was employed in India. Of our employees in India, 57% 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.

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

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 PaaS platforms, 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 data center and PaaS 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 data centers 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 a business continuity plan for our customers in the event of an outage. We maintain other co-locations for the purpose of disaster recovery as well as maintaining backups of our customer’s information. We provide premium disaster recovery and standard disaster recovery to our customers. If a customer opts not to pay for premium disaster recovery, we will only assure that their data is available within 72 hours. This delay could cause severe disruptions to our customers’ customers and may result in customer termination of our solutions. Our premium disaster recovery service provides for an alternative data center and a return to operations within one business day.

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, 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.

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.

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.

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;
• 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 broad market acceptance of our applications and of our business model. If our expectations regarding the market for our applications are not met, our business could be seriously harmed.

We depend on the widespread acceptance and use of our applications as an effective solution for businesses seeking to manage high volumes of customer interactions across multiple channels, including Web, phone, email, print, in-person and AI-enabled digital channels. 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 customer engagement software is rapidly evolving, and concerns over the security and reliability of online transactions, the privacy of users and quality of service or other issues may inhibit the growth of the Internet and commercial online services. 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 customers will increasingly elect to communicate through multiple channels, including AI-enabled digital channels, as well as demand integration of these channels into the traditional telephone-based call center. If any of these assumptions are incorrect or if customers and companies do not adopt digital and AI-enabled technologies in a timely manner, our business will be seriously harmed and our stock price will decline.

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

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 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 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 become unavailable or materially more costly, our business, operating results, and financial condition may be adversely affected.

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.

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 a limited version of our subscription service to customers or potential customers free of charge (known as “Innovation in 30 Days”) in order to promote usage, brand and product awareness, and adoption, and we invest time and resources for such initial engagements without compensation from the customers. 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 become paying customers, 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 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;
• 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.

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, 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.

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. The techniques used to effect unauthorized penetration of computer systems are constantly evolving and have been increasing in sophistication. 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.

Employees or contractors have introduced vulnerabilities in, and enabled the exploitation of, our IT environments in the past and may do so in the future. These cybersecurity attacks threaten to misappropriate our proprietary information, cause interruptions of our IT services and commit fraud. Because the techniques used to obtain unauthorized access, or to sabotage systems, change frequently and generally are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. Further, if unauthorized access 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 must make determinations as to how we prioritize developing and deploying the respective fixes, and we may be unable to do so prior to an attack.

In addition, our customers may authorize third-party access to their customer data located in our cloud environment. Because we do not control the transmissions between customer authorized third parties, or the processing of such data by customer authorized third parties, we cannot ensure the integrity or security of such transmissions or processing.

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 data center, network 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 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. Any insurance coverage we may have related to security and privacy damages may not be adequate for liabilities actually incurred and we cannot be certain that insurance will continue to be available to us on economically reasonable terms, or at all. 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.

Changes in privacy and data protection laws and regulations, including 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.

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 invalidated by the EU Court of Justice. 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 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.

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.

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 impose 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 core compliance obligations commencing in May 2027, applies broadly to personal data processed within India and personal data outside the territory of India if such processing is in connection with any activity related to offering of goods or services to data subjects. 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 SB 26-189’s (the Colorado Artificial Intelligence Act) and California’s regulations governing Automated Decision-Making Technology (ADMT) under the CCPA may require transparency, impact assessments, and opt-out rights. As a deployer of AI, eGain may be subject to obligations under these or similar frameworks. 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 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 our regulated industry verticals, including financial services, insurance, healthcare, and telecommunications, where inaccurate or harmful AI outputs or AI-based decisions could cause customer harm, trigger regulatory scrutiny or claims, and result in legal liability, reputational damage, or competitive harm. While eGain does not control or assume responsibility for such AI-generated outputs, their use by customers could nonetheless result in disputes, regulatory scrutiny, legal liability, or reputational harm that may indirectly affect us. In addition, 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. Emerging laws and regulations, including the EU AI Act, U.S. federal and state initiatives, and other international measures, may require transparency, documentation, risk assessment, monitoring, and mitigation. In the absence of comprehensive federal AI legislation in the U.S., a growing number of states have enacted AI-specific laws, creating a patchwork of regulatory requirements. These state laws vary in scope, definitions, and compliance requirements, which may increase our operational complexity and costs. 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. Further, a number of countries and states are still considering their legislative approach to AI and the law in this area, creating uncertainty. These challenges, along with other issues related to innovative technologies, could expose us to increased compliance costs, competitive harm, regulatory actions, legal liabilities, and reputational damage. Some AI applications raise ethical concerns or have broad societal impacts. If our AI solutions lead to unintended consequences, misuse, or controversy due to their effects on human rights, privacy, employment, or other social, economic, or political issues, we may face reputational harm, negatively affecting our business and financial performance. We also rely in part on third-party AI technologies, such as those provided by OpenAI and other partners. If these partners experience disruptions, errors, restrictions on training data, regulatory challenges, or cease to provide access on commercially reasonable terms, our ability to offer AI-enabled solutions could be impaired.

The FTC and state attorneys general are increasingly scrutinizing AI systems for potential consumer harm, unfair or deceptive practices, and algorithmic discrimination. Enforcement actions and investigations in this area are growing, and any 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.

The inherent uncertainty of AI technologies, combined with evolving legal, ethical, and societal expectations, could materially and adversely affect our business, financial condition, operating results, and prospects.

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 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 pandemic 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.

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;
• 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.

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.

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.

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.

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;
• 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 37% of our outstanding capital stock as of June 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.

RISK MANAGEMENT AND STRATEGY

Protecting our business information, intellectual property, customer and employee data, and technology systems is crucial for our business continuity, regulatory compliance, and stakeholder trust. We have implemented enterprise cybersecurity risk mitigation and governance processes, detailed in our Information Security Protection Program (Security Plan). Our strategy is guided by the Security Plan’s principles, which involve monitoring threats and vulnerabilities, assessing and monitoring related controls, and supporting the Chief Information Security Officer (CISO). Our cybersecurity policies, standards, processes, and practices are integrated into our overall risk management system to enhance our ability to protect our operations and information. This includes annual cybersecurity reporting to the board of directors by senior leadership.

We engage third-party providers to conduct evaluations of our security controls, through penetration testing, independent audits or consulting on best practices. These evaluations include testing both the design and operational effectiveness of our security controls.

Our Security Plan

Our Security Plan, developed in collaboration with third-party consultants, aligns with the National Institute of Standards and Technology (NIST) and ISO27001. This program encompasses security and privacy, risk-based controls, and integrates lessons learned from past cybersecurity incidents. Under the Security Plan, cyber risks, including threats and incidents, are continuously assessed, treated, and monitored. We incorporate insights from incident response and risk mitigation into our cyber risk management strategy to enhance overall cybersecurity. The Security Plan is led by specific management positions selected for their expertise, as detailed below.

Following best practices in cyber risk management, we have worked with recognized third-party experts to align the foundational processes, metrics, monitoring, and reporting of the Security Plan with common frameworks such as NIST.

Third-Party Cyber Risk Management

Our Third-Party Cyber Risk Management Plan ensures that due diligence is carried out on third parties prior to and during engagement. Prior to engagement, third parties are assessed using a questionnaire that covers all areas of security including cyber risk and external documentation is requested such as SOC2 T2, penetration testing, and ISO27001 certification and scope. We include security and privacy clauses within our third party contracts where applicable, which cover the implementation of security controls and self reporting. During engagement, third parties are regularly reviewed, at least annually, to ensure that cyber risks are evaluated and assessed on a continual basis.

Cyber Incident Response Plan

Our Cyber Incident Response Plan outlines the processes for detecting, identifying, prioritizing, and analyzing information security events. Depending on the incident’s scope, business impact, and potential material risk, our CISO, legal counsel, and business stakeholders are engaged. This cross-functional team assesses the appropriate response and mitigation pathway. Once security events are identified through our enterprise detection and monitoring ecosystem, the Incident Response Plan establishes a prioritization and decision workflow to determine the scope, business impact, and potential material risk, implemented in collaboration with the CISO, legal counsel, and business stakeholders.

Additionally, we have implemented an information security training program for employees, which includes security awareness training on cybersecurity risks, simulated phishing emails, and regular communication about cybersecurity risks.

While we occasionally experience cybersecurity threats and incidents, we are not aware of any material risks from these threats, including from past incidents, that have materially affected or are likely to materially affect our business strategy, financial condition, results of operations, or cash flows. However, there is no assurance that future cybersecurity threats will not have a material impact. For more information on our cybersecurity-related risks, please see “Item 1A. Risk Factors.”

GOVERNANCE

Protecting our customers’ data is a top priority for our board of directors and management team. Our risk management team, integrated into our CIS function, is led by our CISO. This team brings together extensive experience in information security, governance, and compliance, covering areas such as engineering, architecture, cybersecurity, and privacy. They are responsible for defining the program, overseeing cybersecurity governance, and gathering insights to assess, identify, and manage cybersecurity threats, their severity, and mitigations.

Our CISO, who reports to the Chief Financial Officer, leads the company’s technology and digital capabilities, including the overall cybersecurity strategy. Our CISO has over 25 years’ experience working in the commercial sector within the IT and security environments, across a variety of business verticals. Prior to this, our CISO was in the Armed Forces working in an IT, telecommunications and security capacity. A member of (ISC)2 and CISSP certified, the CISO understands the security and protection requirements needed for areas such as data protection, PCI/DSS, HIPAA, FedRAMP.

The Audit Committee of our board of directors is charged with oversight of data privacy and cybersecurity risks. Our CISO provides annual updates on cybersecurity risks and related mitigating actions to the Audit Committee, meets with the full board of directors at least annually and informs the Audit Committee promptly if a cybersecurity incident is deemed material. They report to the Audit Committee and the board of directors on compliance and regulatory issues, provide updates concerning continuously-evolving threats and mitigating actions, and present a NIST Cybersecurity Framework Scorecard. Additionally, the CISO discusses and presents strategies to address technological changes, such as AI. In overseeing cybersecurity risks, the Audit Committee focuses on aggregated, thematic issues with a risk-based approach.

Oversight of cybersecurity risk incorporates strategy metrics, third-party assessments, and internal audit and controls. Outside counsel advises the board of directors on best practices for cybersecurity oversight by the board of directors, and the evolution of that oversight over time. Management also reports on strategic key risk indicators, ongoing initiatives, and significant incidents and their effect.

We lease all facilities used in our business as of June 30, 2026. Our corporate headquarters is located in Sunnyvale, California, and we also have corporate offices in Newbury, England, and Pune, India. We believe that our offices are adequate to meet our current and near future operating needs.

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.

The following discussion of eGain’s financial condition and results of operations should be read together with the consolidated financial statements and related notes in this Annual Report on Form 10-K. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. These risks and uncertainties may cause actual results to differ materially from those discussed in the forward-looking statements.

Overview

eGain powers AI-driven knowledge management for the enterprise. We sell our SaaS platform to enterprises that want to deliver trusted, consumable answers to customers, employees, and AI agents — aiming to reduce cost and improve outcomes across knowledge-intensive workflow.. We are headquartered in Sunnyvale, California, USA. We also operate in the United Kingdom and India.

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. Our solutions are used by large enterprises and government organizations across North America and Europe.

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 value our business. SaaS revenue is defined as revenue from cloud delivery arrangements, term licenses, embedded original equipment manufacturer (OEM) royalties and associated support. Professional services revenue includes system implementation, consulting, training, and managed services.

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

(in thousands, except percentages)

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 this 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 GAAP.

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

Critical Accounting Policies and Estimates

Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our 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.

We believe that the assumptions and estimates 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 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. An immaterial amount of SaaS revenue is comprised of our legacy revenue which is associated with license, maintenance, and support contracts on perpetual license arrangements that we no longer sell. 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.

We have a royalty revenue agreement with a customer related to our embedded intellectual property. Under the terms of the agreement, the customer is to provide a combined fixed fee, per agent, for each software license sold containing the embedded software to us. These embedded OEM royalties are included as SaaS revenue. Under revenue guidance, since these arrangements are for sales-based licenses of intellectual property, we recognize revenue only as the subsequent sale occurs. However, since such sales are reported by the customer with a quarter in arrears, such revenue is recognized at the time it is reported and paid by the customer. Any estimated variable consideration would have to be fully constrained due to the unpredictability of such estimates and the risk of significant revenue reversals.

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

Remaining performance obligations represent contracted revenue that have 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 June 30, 2026, our remaining performance obligations were $87.0 million, of which we expect to recognize $62.1 million and $24.9 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 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.

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.

Stock-Based Compensation

We account for stock-based compensation in accordance with Accounting Standards Codification (ASC) 718, Compensation — Stock Compensation. 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 an expense over the vesting period. 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 lives. We determine 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 deems to be non-recurring and non-indicative of future events. We base our estimate of expected life on the historical exercise behavior, cancellations of all past option grants made by us during the time period in which our common stock has been publicly traded, the contractual term, the vesting period and the expected remaining term of the option. Based on our historical experience of option pre-vesting cancellations, we have assumed an annualized forfeiture rate for our stock options. We record additional expense if the actual forfeiture rate is lower than we estimated and record a recovery of prior expense if the actual forfeiture rate is higher than what we estimated.

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 impairment for fiscal years ended June 30, 2026 and 2025.

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 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.

As described in Note 1 of Notes to Consolidated Financial Statements included in Item 8 Financial Statements and Supplementary Data of this Annual Report, certain Company contracts have contractual billings which 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 at contractually specified dates.

Tax Legislation

On August 16, 2022, the Inflation Reduction Act of 2022 (IRA) was enacted and is effective for taxable years beginning after December 31, 2022. The IRA includes several clean energy incentives and significant tax provisions, including a 15% corporate alternative minimum tax based on adjusted financial statement income and a 1% excise tax on certain stock repurchases. Based on the Company's current analysis, the IRA's corporate alternative minimum tax is not expected to have a material impact on the Company's consolidated financial statements. However, the Company remains subject to the 1% excise tax on applicable share repurchases and records any related expense as incurred. The Company will continue to monitor future guidance and evaluate the impact of any changes in facts, circumstances, or interpretations of the law. In 2024, California enacted legislation, with the first being S.B.167, which suspends the use of NOLs by businesses and individuals for tax years 2024 through 2026, limits the use of tax credits by businesses and individuals to $5 million for tax years 2024 through 2026, and clarifies that income not included in apportionable business income is excluded from the sales factor of the apportionment formula. The second, S.B.175, provides some relief from the $5 million credit limitation in S.B. 167 by allowing taxpayers subject to the limit to elect to later receive a refund of credits they would have otherwise used to reduce tax liabilities during the limitation period.

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted in the United States. OBBBA includes significant tax provisions, including the permanent extension of certain provisions of the Tax Cuts and Jobs Act, modifications to the international tax regime, and the restoration of favorable tax treatment for certain business expenditures. The legislation contains multiple effective dates, with certain provisions effective in 2025 and others phased in through 2027. The Company has evaluated the provisions currently in effect and continues to assess the impact of future effective provisions on its consolidated financial statements. The Company will recognize the effects of OBBBA in the periods in which the relevant provisions become effective or additional guidance is issued, as applicable.

Fiscal Year 2026 Compared with Fiscal Year 2025

Our effective tax rate for both fiscal years 2026 and 2025 was a tax provision of $1.9 million and a tax benefit of $26.6 million, respectively. The change in our effective tax rate for fiscal year 2026 as compared to fiscal year 2025 was primarily due to the change in valuation allowance, federal statutory income tax rate, the research and development tax credits, and current state taxes, net of federal benefit.

The income before income tax (provision) benefit between the U.S. and foreign countries impacted our effective tax rate as a result of the geographic distribution and customer demand related to our products and services. In fiscal year 2026, our U.S. and foreign income before our income tax (provision) benefit was $7.6 million and $3.2 million, respectively. In fiscal year 2025, our U.S. and foreign income before our income tax was $3.6 million and $2.0 million, respectively.

Deferred Tax Valuation Allowance

When we prepare our consolidated financial statements, we estimate our income tax liability for each of the various jurisdictions where we conduct business. This requires us to estimate our actual current tax exposure and to assess temporary differences that result from differing treatment of certain items for tax and accounting purposes. The net deferred tax assets are reduced by a valuation allowance if, based upon weighted available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. We make significant judgments to determine our provision for income taxes, our deferred tax assets and liabilities and any valuation allowance to be recorded against our net deferred tax assets. In the fiscal year ended June 30, 2025, we concluded that the valuation allowance related to the U.S. federal and state (excluding certain California tax attributes) deferred tax assets was no longer required due to the assessment of our recent income/loss and forecast future taxable income. As of June 30, 2026, we had a valuation allowance of approximately $6.2 million attributable to California net operating losses and research and development credit carryforwards.

We apply ASC 740, Income Taxes, in determining any uncertain tax positions. The guidance seeks to reduce the diversity in practice associated with certain aspects of measurement and recognition in accounting for income taxes and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position that an entity takes or expects to take in a tax return. Additionally, ASC 740 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Under ASC 740, an entity may only recognize or continue to recognize tax positions that meet a “more likely than not” threshold. In accordance with our accounting policy, we recognize accrued interest and penalties related to unrecognized tax benefits as a component of other (expense) income, net in the consolidated statements of operations.

We consider the earnings of certain non-U.S. subsidiaries to be indefinitely invested outside the United States, on the basis of estimates, that future domestic cash generation will be sufficient to meet future domestic cash needs and our specific plans for reinvestments of those subsidiary earnings. We have not provided for taxes of approximately $30.3 million of undistributed earnings of foreign subsidiaries indefinitely invested outside the United States. If we decide to repatriate the foreign earnings, we would need to adjust our income tax provision in the period we determined that the earnings will no longer be indefinitely invested outside the United States.

Fair Value of Financial Instruments

Our financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued liabilities. We do not have any derivative financial instruments. We believe the reported carrying amounts of these financial instruments approximate fair value, based upon their short-term nature and comparable market information available at the respective balance sheet dates.

Results of Operations

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

Revenue

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

The following table presents our SaaS and professional services revenue during the fiscal years indicated:

(in thousands, except percentages)

Total Revenue

Total revenue increased $2.7 million during the fiscal year ended June 30, 2026, from the same period in fiscal year 2025, largely due to increased SaaS revenue of $3.4 million and offset with a decrease in professional services revenue of $660,000 in fiscal year 2026.

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 an increase of $741,000 and $546,000 in total revenue during the fiscal years ended June 30, 2026 and 2025, respectively.

SaaS Revenue

(in thousands, except percentages)

SaaS revenue includes revenue from cloud delivery arrangements, term licenses and embedded OEM royalties and associated support. Revenue from SaaS increased by $3.4 million during the fiscal year ended June 30, 2026, from the same period in fiscal year 2025.

SaaS revenue was $85.3 million and $81.9 million during the fiscal years ended June 30, 2026 and 2025, respectively, which represented an increase of 4% or $3.4 million. SaaS revenue represents 94% and 93% of total revenue for the fiscal years ended June 30, 2026 and 2025, respectively.

Excluding an increase of $702,000 due to foreign exchange rate fluctuation, SaaS revenue increased by $2.7 million during the fiscal year ended June 30, 2026, from the same period in fiscal year 2025.

Professional Services Revenue

(in thousands, except percentages)

Professional services revenue includes consulting, implementation, training, and managed services. Revenues from professional services decreased by $660,000 during the fiscal year ended June 30, 2026, from the same period in fiscal year 2025.

Professional services revenue was $5.9 million and $6.5 million during the fiscal years ended June 30, 2026 and 2025, respectively, which represented a decrease of 10% or $660,000. Professional services revenue represents 6% and 7% of total revenue for the fiscal years ended June 30, 2026 and 2025, respectively.

Excluding an increase of $40,000 due to foreign exchange rate fluctuation, professional services revenue decreased by $700,000 during the fiscal year ended June 30, 2026, from the same period in fiscal year 2025. We expect professional services revenue to vary depending on the volume of projects and timing of recognition.

Revenue by Customers-Level

(in thousands)

Revenue from AI customers increased by $9.2 million, or 20%, to $55.1 million in fiscal year 2026 from $45.9 million in fiscal year 2025. We expect our AI customer revenue to grow as we expand our customer base, reflecting the continued adoption of our AI offerings. Revenue from Cisco original equipment manufacturer (OEM) increased by $347,000, or 3%, while revenue from Other decreased by $6.9 million, or 21%. The decrease from Other was related to the expected decline from customers that do not actively utilize our AI offerings.

Revenue by Geography

(in thousands, except percentages)

Revenue from North America sales increased by 5% from $68.8 million during the fiscal year ended June 30, 2025 to $72.3 million during the fiscal year ended June 30, 2026 due to an increase of $4.8 million in SaaS revenue; partially offset by a decrease of $1.2 million in professional service revenue.

Revenue from EMEA sales decreased by 4% from $19.7 million during the fiscal year ended June 30, 2025 to $18.8 million during the fiscal year ended June 30, 2026 due to a decrease of $1.4 million in SaaS revenue; partially offset by an increase of $553,000 in professional services revenue.

Cost of Revenue

(in thousands, except percentages)

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 decreased by $243,000 or 1% during the fiscal year ended June 30, 2026 from the same period in fiscal year 2025. This was primarily due to decreases of (i) $1.3 million in cloud computing costs and (ii) $105,000 in outside consulting costs; partially offset by an increase of $1.3 million in personnel-related costs during the fiscal year ended June 30, 2026, from the same period in fiscal year 2025.

Excluding a decrease of $54,000 due to foreign exchange rate fluctuation, cost of SaaS revenue decreased by $189,000 for the fiscal year ended June 30, 2026, from the same period in fiscal year 2025.

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 $1.9 million or 22% during the fiscal year ended June 30, 2026 from the same period in fiscal year 2025. This was due to a decrease of $2.2 million in personnel-related costs; partially offset by an increase of $322,000 in outside consulting costs from the same period in fiscal year 2025.

Excluding an increase of $27,000 due to foreign exchange rate fluctuation, cost of professional services revenue decreased by $1.9 million for the fiscal year ended June 30, 2026, from the same period in fiscal year 2025.

Operating Expenses

Research and Development

(in thousands, except percentages)

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 decreased by $155,000 or 1% during the fiscal year ended June 30, 2026, from the same period in fiscal year 2025. This was primarily due to a decrease of $270,000 in personnel-related costs; partially offset by an increase of $200,000 in outside consulting costs.

Excluding a decrease of $85,000 due to foreign exchange rate fluctuation, research and development expense decreased by $70,000 for the fiscal year ended June 30, 2026, from the same period in fiscal year 2025.

Sales and Marketing

(in thousands, except percentages)

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 $120,000 or 1% during the fiscal year ended June 30, 2026 from the same period in fiscal year 2025. This was primarily due to increases of (i) $162,000 in personnel-related costs and (ii) $57,000 in lead generation costs; partially offset by a decrease of $257,000 in outside consulting costs.

Excluding an increase of $158,000 due to foreign exchange rate fluctuation, sales and marketing expense decreased by $38,000 for the fiscal year ended June 30, 2026, from the same period in fiscal year 2025.

General and Administrative

(in thousands, except percentages)

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, stock-based compensation, and allocated overhead. General and administrative expenses also include fees for professional services, warrants, provision for credit losses and, to a lesser extent, occupancy costs and related overhead.

General and administrative expenses increased by $1.3 million or 16% during the fiscal year ended June 30, 2026, from the same period in fiscal year 2025. This was primarily due to increases of (i) $1.4 million in warrant expense and (ii) $688,000 in legal expenses; partially offset by decreases of (i) $441,000 in outside consulting costs and (ii) $162,000 in accounting, audit, and administrative costs.

Excluding an increase of $22,000 due to foreign exchange rate fluctuation, general and administrative expense increased by $1.3 million for the fiscal year ended June 30, 2026, from the same period in fiscal year 2025.

Stock-Based Compensation

Stock-based compensation expense is accounted for in accordance with the provisions of the accounting guidance which requires the measurement and recognition of compensation expense for all equity-based payment awards made to employees, members of our board of directors and consultants, based upon the grant-date fair value of those awards. We value our share-based payments under ASC 718, and record compensation expense for all share-based payments made to employees based on the fair value at the date of the grant.

The effect of recording stock-based compensation for fiscal year 2026 and 2025 is as follows:

(in thousands)

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

Below is a summary of stock-based compensation included in the cost and expenses:

(in thousands, except percentages)

Stock-based compensation expense includes the amortization of the fair value primarily of stock options awarded to employees, members of our board of directors and consultants. The fair value of stock options granted is recognized as an expense over their respective vesting schedule. The increase in our stock-based compensation expense in fiscal year 2026 compared to fiscal year 2025 was primarily due to increases in stock option vesting over their respective periods, company-wide headcount, and equity grant activity.

Income from Operations

(in thousands, except percentages)

Income from operations was $8.0 million and $4.4 million with an operating margin of 9% and 5% in fiscal year 2026 and 2025, respectively. This is primarily due to an increase in gross margin.

Interest Income, Net

Interest income, net primarily consists of interest earned on money market accounts. Interest income, was income of $2.3 million and $2.5 million for the fiscal years ended June 30, 2026 and 2025, respectively.

Other Income (Expense), Net

Other income (expense), net primarily included foreign exchange rate fluctuations on international trade receivables. Other income (expense), net was income of $581,000 and expense of $1.3 million for the fiscal years ended June 30, 2026 and 2025, respectively.

Income Tax (Provision) Benefit

Income tax (provision) benefit consists of federal, state and foreign income as of June 30, 2026. We consider all available evidence, both positive and negative, including but not limited to earnings history, expiring attributes, projected future outcomes, industry and market trends and the nature of each of the deferred tax assets. We recorded an income tax provision of $1.9 million and benefit of $26.6 million in the fiscal years ended June 30, 2026 and 2025, respectively.

New Accounting Pronouncements

For information with respect to recent accounting pronouncements and the impact of these pronouncements on our consolidated financial statements, see Note 1 of Notes to Consolidated Financial Statements included in Item 8 Financial Statements and Supplementary Data of this Annual Report.

Liquidity and Capital Resources

Overview

Our principal sources of liquidity were cash and cash equivalents, restricted cash, and accounts receivable. Our liquidity sources were $97.7 million compared to $95.7 million as of June 30, 2026 and 2025, respectively. Our cash, cash equivalents, and restricted cash were $73.3 million and $62.9 million as of June 30, 2026 and 2025, respectively.

Our working capital was $42.9 million and $38.4 million as of June 30, 2026 and 2025, respectively. Our deferred revenue was $48.5 million and $50.5 million as of June 30, 2026 and 2025, respectively.

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. 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 anticipated increases in our revenue, our ability to retain existing customers and customer purchasing and payment patterns, many of which are beyond our control.

Cash Flows

For the fiscal years ended June 30, 2026 and 2025, our cash flows were as follows (in thousands):

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, the timing of employee related costs including costs capitalized to obtain revenue contracts, amortization of right-of-use assets, and changes in operating assets and liabilities during the year.

Cash provided by operating activities increased by $15.9 million during the fiscal year ended June 30, 2026, driven primarily by the timing of accounts receivable collections and payments for accrued liabilities.

Net cash used in investing activities increased by $52,000 during the fiscal year ended June 30, 2026, driven primarily by increased 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 decreased by $6.2 million during the fiscal year ended June 30, 2026, driven primarily by funds used for repurchases of our common stock and offset by proceeds of employee stock option exercises and employee stock purchase plan purchases. Funds used for repurchases of our common stock were $11.5 million and $15.8 million during fiscal year ended June 30, 2026 and 2025, respectively.

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.

The following table summarizes our contractual obligations as of June 30, 2026 and the effect such obligations are expected to have on its liquidity and cash flow in future periods (in thousands):

Off-Balance Sheet Arrangements

As of June 30, 2026, we had no significant off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.

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 consist primarily of cash and cash equivalents, accounts receivable, net, and operating lease ROU asset. As of June 30, 2026 and 2025, identifiable assets denominated in foreign currency totaled approximately $38.8 million and $25.9 million, respectively. A 10% increase in the value of the dollar relative to other currencies would decrease the value of these assets by $3.9 million between June 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 June 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.

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 Annual Report on Form 10-K, our Chief Executive Officer and Chief Financial Officer have concluded that, as of June 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.

Management’s Annual Report on Internal Control Over Financial Reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of the effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control—Integrated Framework (2013), our management concluded that our internal control over financial reporting was effective as of June 30, 2026.