eGain Corp

eGain Corp (NASDAQ-CM: EGAN) is a Software & Computer Services Company offering SaaS (software-as-a-service) solutions to support digital engagement.

Investment Highlights – eGain Corp – Speculative Buy at USD 11.85

• The Company has witnessed a continuous increase in the revenue from SaaS and professional services and expects further growth in the fourth quarter as well.
• In the last one year, the Company delivered a significant return of ~62.11% and delivered higher returns compared to the benchmark Index.
• As per valuation metrics, EV/Sales multiple of the eGain Corp is currently lower as compared to the corresponding multiple of the Software & IT Services industry. It reflects, shares are undervalued as compared to the industry.
• From the technical standpoint, 14-day RSI is supporting an upside move (around 45 level), which means the stock price could increase in the short term.

Key Risks

• Due to the Covid-19 crisis, the Company might not be able to deliver the project on time or project cancellations by customers, which could put financial stress on the business.
• Moreover, failure to adopt the technological changes can reduce the level of business. 

Financial Highlights – Q1 FY2021 (30 September 2020) (released on 10 November 2020)

• In the first quarter of the financial year 2021, the total revenue surged by 11% to $19.1 million, reflecting a 29% increase in SaaS revenue.
• The revenue from SaaS and professional services surged by 23% on the year-on-year basis and contribute 91% of the total revenue.
• The net income on GAAP basis increased to $2 million in Q1 FY2021 (Q1 FY2020: $1.2 million), with an increase in basic EPS to $0.07 (Q1 FY2020: $0.04).
• The cash flow from operations increased to $5.7 million for the period (Q1 FY2020: $2.7 million).

One Year Share Price Chart

(Source: Refinitiv, chart created by Kalkine Group)

Conclusion

The Company has shown an improvement in financial performance in the first quarter of the financial year 2021. Both the revenue and the net income increased, with higher cash flow from operations. The Company expects total revenue growth between 0% to 3%, with 8% to 11% growth in SaaS revenue in the second quarter of FY2021. eGain expects a net loss of $1 million in GAAP basis in Q2 FY2021. Due to covid-19 pandemic, the Company implemented WFH (work from home) and social distancing policies and cancelled certain marketing and sales events, while did not have any material impact on the operational performance till date. EGAN continues to support customer needs in the best possible way during the crisis. The stock made a 52-week low and high of USD 4.80 and USD 20.88, respectively.

Based on the decent growth prospects, we have given a “Speculative Buy” recommendation on eGain Corp at the closing price of USD 11.85 (as on 26 January 2021).

*All forecasted figures and Peer information have been taken from Refinitiv, Thomson Reuters.

Disclaimer  

The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as personalised advice.