eGain Corporation
Q4 2016 Earnings Call Transcript

Published: 9 Sep 2016

[Operator:]

Good day and welcome to the eGain Fiscal 2016 Fourth Quarter and Full Year Financial Results Conference Call. Today's conference is being recorded. At this time I would like to turn the conference over to Mr. Todd Kerhli of MKR Group. Please go ahead, sir.

[Todd Kehrli:]

Thank you, operator, and good afternoon everyone, and thank you for joining us today for eGain's fiscal 2016 fourth quarter and full year financial results conference call. Please note that this call is being recorded and will be available for replay on the Investor Relations section of our website at www.egain.com. Before we begin, I'd like to remind all listeners that this conference call contains forward-looking statements within the meaning of the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among other matters, our belief that we are seeing and we'll continue to see the benefits of the Company's transition to a cloud-based business and will continue to see success in implementing a land-and-expand sales model, and that the enterprise market is increasingly preferring our broad and deep customer engagement suite delivered with the security in cloud. The achievement or success of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions, if any such risks or uncertainties materialize or if any of the assumptions prove incorrect, the Company's results could differ materially from the results expressed or implied by the forward-looking statements we made. The risks and uncertainties referred to include but are not limited to our ability to capitalize on customer engagement, the success of our organizational changes, risks that are hybrid revenue model and lengthy sales cycles may negatively impact our operating results, risks related to our reliance on a relatively small number of customers for a substantial portion of our revenue, our ability to compete successfully and manage growth, our ability to develop and expand strategic and third-party distribution channels, risks associated with new product releases, risks related to our international operations, our ability to invest resources to improve our products and continue to innovate, and other risks detailed from time to time in eGain's filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K and currently reports on Form 10-Q which can be accessed on the Securities and Exchange website at www.sec.gov. These forward-looking statements are based on current expectations and speak only as of today's date. The Company assumes no obligation to update these forward-looking statements. On today's call, we will refer to adjusted EBITDA, which is a non-GAAP financial measure that is defined as net income adjusted for the impact of purchase accounting adjustments to deferred revenue related to acquisitions, depreciation and amortization, stock-based compensation expense, interest expense, net income tax, amortization of acquired intangibles, and acquisition-related expenses. Non-GAAP results are presented for supplemental information purposes only and should not be considered a substitute for financial information presented in accordance with generally-accepted accounting principles. We believe that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and comparing the Company's financial measures with other software companies who present similar non-GAAP financial measures to investors. With me today are Ashu Roy, eGain's Chairman and Chief Executive Officer, and Eric Smit, Chief Financial Officer. To begin our discussion I'll turn the call over to Ashu. Please go ahead.

[Ashu Roy:]

Thank you, Todd. Hello everyone. We have made significant progress this past year with the strategic transition of our business and we are clearly demonstrating movement to the cloud. As you look at our performance for the year, you see that our new subscription ACV for the year grew nicely year over year, and that was about 113% growth year over year. For the quarter, our new subscription ACV was up 76%, and our total subscription ACV for the year was up 19% on a constant currency basis. If you look at our revenue, the top line revenue was impacted by three factors. The perpetual license revenue was down $3.9 million year over year, due to a mix shift towards subscription which is [inaudible]. The PS efficiency benefits, the professional services part, which is something that we've been talking about for some time and that's the idea of driving more automation and simplification in our solutions when we implement them for customers, and we are passing on those automation and simplification benefits to our customers, and that resulted in our PS revenue reducing by $3.2 million through the whole fiscal year. Now, we have been noting the fact along with that that increased efficiencies and better utilization has improved our gross margins on the professional services side going up to 11% for the fiscal year 2016 compared to minus 4% for the prior year. And the last bit which was an impact on the revenue line was the currency impact on total revenue of a little over $2 million, $2.1 million, and that was across all lines of revenue stream, including license and professional services, but roughly half of that or a little more than that can be attributed to the rest of the revenue which is around subscription and support. So those were the areas where our top line revenue was impacted. If you look at -- I apologize. If you look at our margins and cash flow, that improved significantly as well through the year, which was something that we were focused on. We want to make sure that as we are navigating this transition to the cloud model, that we have good control over our business in terms of cash generation and sustainability, and we did that well through the year. Our gross margin improved up to 69% for the fiscal year compared to 65% for the prior year, and our adjusted EBITDA was $1.9 million this year compared to minus $1.4 million in fiscal 2016. And similarly our operating cash flow turned positive as well. That's been a good year for us in terms of the business performance along the lines of the transition that we have started to execute in fiscal 2015. Now, turning to the business and market highlights, some of the things that I think are noteworthy for our business that I want to talk about, number one is the fact that our subscription bookings continue to grow where 44% of our new bookings in fiscal 2016 were subscription-based compared to 27% the year before. If you look at the way we've been able to implement our land-and-expand strategy, that's working well and the early signs are promising. We have now implemented that model across our business. If you recall, we started to do that toward the end of last calendar year and we completed that transition in the third fiscal quarter of 2016 across U.S. and Europe. This approach of land-and-expand, we believe will drive better customer sat [ph], stickier relationships, and more strategic client engagements. In terms of noteworthy areas of new client wins, we have seen the government sector and the healthcare sector pick up quite a bit in fiscal 2016. For instance, in the government sector, we find Social Security Administration in the U.S. and IRS. And IRS, for example, is implementing their digital taxpayer initiative, which is a multiyear program, in the eGain plans. It is a big milestone for our cloud capability and our solution. We also won several new logos in health insurance as well as health provider segments in the U.S. If you look at the trend in the financial services sector, there's an increasing openness to use our secure eGain cloud in that vertical as well, something that we, in the past, saw resistance toward the cloud. For example, our Barclays, one of our long-term clients in the on-premise world and Union Bank, another on-premise client of eGain, had both of them recently signed up to move to the eGain cloud. We also signed up a couple of new bank logos in the eGain cloud last quarter. Looking at some of the strategies that we have been experimenting with and now starting to scale, our try-and-buy has been an area where we have improved and refined our try-and-buy capability over the last several quarters. What we started at the beginning of the fiscal year, a little before that, has become our preferred way to shift the goalpost when we are competing to land new logos. It's a capability that our competitors find hard to replicate, given our asymmetric advantage of broad, deep, and robust suite. Looking at digital transformation, a group that we created to further build higher level and long-term relationships with our customers when they look to operationalize their digital strategies, this is a group that has started to now find its footing in terms of meeting the needs of operationalizing these digital strategies for clients. And with our small team of four people, they're able to bring to the clients is this combination of operational industry experience and eGain solution expertise. It's a very valuable capability that we feel now is helping improve our stickiness and our expansion capability in these existing clients. Looking at our professional services group, we talked about the improvements in gross margins. What underlies that is the fact that we have now developed and rolled out an eGain method which has gone away from the earlier wish list customization approach to embracing a best practice configuration, and all the while focusing on improving speed to implement something that we've been able to improve by up to 50%, and reducing the cost that clients are paying for it by up to 25%. These services offerings are now becoming a competitive advantage for us in the cloud world. On the partnership side, the Cisco partnership, it's something that is continuing to go well for us and we have deepened it. Specifically, we are now going from an optional OEM model, which we've had with them for a while, which implies that the white-label eGain email and chat products are sold as additional line items for extra money by Cisco to their customers, on top of their enterprise contact center platform. From that, we are now moving into a bundled OEM model where every single seat of the enterprise contact center sold by Cisco will have bundled email and chat white-labeled in an OEM model from eGain. This is a significant step forward because, not just the business model and the ease of consumption for the end-client but also the fact that we are now, with this new version, leveraging a modern UI capability of eGain to deliver a much more seamless user experience for those Cisco customers. As we look at the market broadly, the enterprise customers are increasingly seeing value in a easy, unified solution that is scalable. And the point product capabilities are being pulled together into more of a platform, and that's something which we feel very good about because that's something we've been very focused on, not just providing point capabilities but providing a broad platform for digital customer engagement. In my opinion, I think we are probably a couple of years away from hitting a tipping point where the actual digital engagement investment in dollars is going to start to exceed the investment in voice-based infrastructure for customer engagement. And that is obviously a huge price on something that we feel we have a very good shot at. We believe, and the market confirms, that our knowledge and digital and EIN [ph] analytics all put together, that proposition is unique in the market. If you look at what we offer today, you see that our solution combines not just the core technologies around these four buckets of digital knowledge EIN analytics, but also provides ready out-of-the-box applications that are configurable. Case in point being something like virtual assistance. As some of you probably know, that's an area of great market interest nowadays. In the last year or so there's been a lot of interest in that particular way of engaging customers. It turns out that we've had that capability for over ten years, and we have had customers and we have a very scalable solution that is completely unified in our environment. That richness that we bring illustrates the value of the eGain health. And the fact that we can deliver all this in the cloud in a configurable way is something that customers are finding quite valuable. So we see increasingly the market coming to us from multiple directions. And so the team that we have put in place, the go-to market approach that we have now, we believe, will serve us well. Let's take a quick look at our go-to market and sales since it's an end-of-the-year reflection of where we are. What you see is, very simply put, we are still going down the same direction that we have in the past year, just that we are focusing sharper. And what I mean by that is that we are targeting these B2C organizations with 300-plus contact center agents that have complex product and process needs and are compliance heavy. So if you look at the target verticals we're going after, the top three verticals are banking, financial services, insurance, one bucket, healthcare second bucket, government third bucket. And then you look at the next set of verticals that we have, and that is retail branded manufacturing put together as one, telco and utilities as another, and BPOs. These are the target verticals with 300-plus contact center agents or more that we are selling to. The target functions continue to be the same

[Eric Smit:]

Thank you, Ashu, and thanks for joining us today. Before I begin my prepared remarks, I'd like to note the numbers I'll be sharing are non-GAAP unless otherwise noted. Included with the press release is a supplemental table that provides a reconciliation of the non-GAAP to GAAP numbers. I'll start by reviewing our ACV and booking metrics for the quarter and fiscal year then go into details of our financial results. Our new subscription ACV for the quarter was $3.4 million, up 76% year over year and 93% in constant currency. For the fiscal year, our new subscription ACV was $7.7 million, up 113% year over year and 124% in constant currency. Our total subscription ACV at the end of the year was $25.4 million, up 10% year over year and 17% in constant currency. And our total subscription and support revenue ACV at the end of the fiscal year was $43.5 million, up 1% year over year and 9% in constant currency. We continue to provide the gross bookings metric, which, remind you, that this is a total contract value number that includes renewals, comparisons against prior periods are not often relevant due to the timing of multiyear renewals and durations of contract signs, which may vary from one to five years. Gross bookings or revenue plus change in deferred for the fourth quarter was $26.9 million, up 26% year over year and up 42% in constant currency. For the fiscal year, bookings were $73.9 million, compared to $78.5 million in fiscal 2015. The foreign currency impact on gross bookings for the year was $5.2 million. Backlog as of June 30, 2016, or deferred revenue plus unbilled and uncollected, was $46.8 million, compared to $42.3 million at the end of the fourth quarter last year. Now turning to our revenue, total revenue for the fourth quarter was $17.6 million, compared to $17.1 million in the comparable year-ago quarter. For the fiscal year, total revenue was $69.5 million, compared to $76.3 million in fiscal year 2015. The foreign currency impact on total revenue was a net decrease of $846,000 for the quarter and $2.1 million for the year. Our subscription and support revenue for the fourth quarter was $10.8 million, compared to $10.1 million in the comparable year-ago quarter. For the fiscal year, subscription and support revenue was $42.9 million, up slightly from $42.7 million in fiscal year 2015. License revenue for the fourth quarter was $3.8 million, compared to $2.8 million in the comparable year-ago quarter. For the fiscal year, license revenue was $14.5 million, down from $18.3 million in fiscal year 2015. This again is consistent with our transition to the cloud where we are now only offering perpetual licenses through the Cisco channel and to existing on-premise customers. Professional services revenue for the fourth quarter was $3 million, down from $4.2 million in the comparable year-ago quarter. For the fiscal year, professional services revenue was $12.1 million, down from $15.3 million in fiscal year 2015. Again this is consistent with our strategic direction as Ashu had indicated or mentioned where we've made these improvements to our products that has simplified our deployment process resulting in the reduction in the time and cost for average implementation projects. And we've made adjustments to our peers organization to align with these changes, as evidenced by a margin improvement that I'll get to later on in the call. Now, looking at our gross profit and gross margins, gross profits for the fourth quarter was $12.6 million or a gross margin of 71%, compared to a gross profit of $11.3 million or a gross margin of 66% in the comparable year-ago quarter. If you look at the breakout of gross margin by revenue type, subscription and support revenue gross margin for the quarter was 75%, unchanged from the comparable year-ago quarter. And professional services gross margin was 21% for the quarter, compared to 22% in the comparable year-ago quarter. For the fiscal year, gross profit was $47.8 million or a gross margin of 69%, compared to a gross profit of $49.9 million or a gross margin of 65% for the same period last year. Subscription and support revenue gross margin was 75%, compared to 76% last year. And professional services gross margin for the fiscal year was 11%, compared to a negative 4% last year. Now turning to our operations. Operating costs for the fourth quarter came in at $10.9 million, a 6% decrease from $11.5 million in the comparable year-ago quarter. For the fiscal year, total operating costs were $46.6 million, a 9% decrease from $51.4 million in the prior year. Adjusted EBITDA for the quarter was $1.9 million or $0.07 per share, compared to adjusted EBITDA loss of $307,000 or $0.01 per share for the fourth quarter of fiscal 2015. For the fiscal year, adjusted EBITDA was $1.9 million, compared to a loss of $1.4 million or $0.05 per share for the fiscal year 2015. By streamlining our business operations, we've been able to deliver this improvement to our adjusted EBITDA even while revenues have declined 9%. GAAP net income for the fourth quarter was $1.4 million or $0.05 per share, which included a $1.5 million income tax benefit, compared to a net loss of $2.9 million or a loss of $0.11 per share in the comparable year-ago quarter. For the fiscal year, net loss was $6.2 million or a loss of $0.23 per share compared to a net loss of $12.4 million or a loss of $0.47 per share in the fiscal year 2015. Now, turning to our balance sheet and cash flows. Cash and cash equivalents was $11.8 million as of June 30, 2016, compared to $8.7 million as of June 30, 2015. Our net debt position at the end of year was $9.8 million, compared to a net debt position of $10.9 million at the end of fiscal year 2015. Cash flow from operations for the quarter was $2.2 million, compared to cash flow used in operations of $3.6 million in the comparable year-ago quarter. And cash flow operations for the fiscal year was $1.9 million, compared to cash used in operations of $10.5 million last year. Total net accounts receivable was $11.9 million at June 30, 2016, compared to $13.1 million at June 30, 2015. And DSOs for the fourth quarter were 61 days, compared to 69 days from the comparable year-ago quarter. Total revenue, which includes both deferred revenue on a balance sheet of $15.7 million and unbilled deferred revenue that remains off balance sheet of $31.1 million, was $46.8 million as of June 30, 2016, compared to $42.3 million at June 30, 2015. So in summary, we are pleased with our progress in fiscal year 2016. We believe we are now more than halfway through the transition. Our focus on alignment of costs and cash flow during this business transformation is yielding positive results as evidenced by the significant improvement to our cash flow from operations in fiscal year 2016 and almost $12 million improvement compared to last fiscal year, and our improved adjusted EBITDA margins from a negative 2% in fiscal year 2015 to a positive 3% in fiscal year 2016. I'll now hand the call back to Ashu for his closing remarks and some outlooks on our fiscal year 2017.

[Ashu Roy:]

Thank you. Thank you very much, Eric. Let's look at some of the things that we feel we will be able to accomplish and we're targeting for fiscal 2017. Number one, our new subscription bookings should continue to grow, compared to fiscal 2016, and we think that we will be able to have a majority of our new bookings from subscriptions in fiscal 2017. If you recall, we did 44% of our total booking - new bookings were subscription in fiscal 2016. Looking at revenue, it's likely to be flat year over year in constant currency terms. Three reasons. One, the perpetual license revenue is likely going to be down year over year as we mix shift towards more subscription sales. Our services revenue is likely to be flat because we want to continue to drive automation and pass on the efficiency benefits to customers, and we think that's the right way for us to drive our business and client success. And then finally, the subscription and support revenue is going to be impacted by a significant reduction of about $5 million ACV with one client, and this reduction is going to be effective in January of 2017. So we are going to experience roughly half of that impact in fiscal 2017. And so all these three things put together is going to be a result that we think the revenue will be roughly flat year over year. But equally importantly, we continue to believe that, in this transition period, we must run a positive cash flow business from operations, and that's something we will attempt to do and we believe we will be able to do in fiscal 2017. And the reason we are not setting targets on the profitability or the EBITDA numbers at this time is we just feel that we are at an inflection point in terms of starting to reinvest in our front-end sales and marketing. We feel that we're still refining the sales productivity and the sales model and we want to have the flexibility that we can turn on the gas sometime in - through this fiscal year as we see the productivity level at a point where we are comfortable [inaudible] from thereon. That ends our prepared remarks. I'll open up the line for questions. Operator?

[Operator:]

Thank you. [Operator Instructions] We'll take our first question from Jeff Van Rhee with Craig-Hallum.

[Jeff Van Rhee:]

Great. Thank you. Thanks for taking the question. So, a few questions for you guys. First, I guess, the cloud, in the guidance you just gave for 2017 saying it's going to be over half, obviously fairly aggressive transition to cloud 2015 to 2016. We're now at 44%, so, certainly 50% isn't much of a stretch here. Can you give us a little better sense of where you think that might end up even if it sits within a range? You had been on obviously a very aggressive transition that suggests a little slower transition. Just want to be clear there.

[Ashu Roy:]

Yeah, that's a good question, Jeff. Thanks. So we believe that we'll be able to get to better numbers than that, Jeff. Because if you look at where we are now selling, all our direct sales is cloud-based except for some, like a handful of existing customers where we're still selling add-ons in the on-prem world. And then the only place where we are looking at the perpetual model still is the fiscal channel. So I think the number is going to be north of that 50% number, and perhaps as we get more clarity through the quarters, we can start to up that guidance.

[Jeff Van Rhee:]

I mean, would 60 be a shock? I mean, is that reasonable but -- still early but reasonable, or how would you?

[Ashu Roy:]

It's achievable but that's not the guidance we are putting out right now.

[Jeff Van Rhee:]

Okay. Professional services in the guide is flat. It's obviously come down considerably and with the heavier license install that obviously pulled a lot more PS with it. So, I guess, with license being expected to be down, and the commentary about the cloud installs just themselves requiring less PS? I'm somewhat surprised I guess that you're looking for that to be flat. I would have thought it would be down as well. So, can you just fill in the gaps there?

[Ashu Roy:]

That's a good point, yeah. So, two things there. One is, I think the volume of business we are handling is growing in terms of the number of installs and number of customers, number of new logos. That's one countervailing factor. And the other is that we are starting to play with early days so we are not really talking too much about it yet. We're starting to play with the notion of managed services for some of these on-prem customers so that we can wrap a layer of ongoing professional services to make them much more successful.

[Jeff Van Rhee:]

Okay. You mentioned a few financial services customers you had to migrate. If you move somebody from the premise model to the subscription world, how does the annual maintenance revenue stream for premise customer compared to an annual subscription revenue stream for that same customer roughly?

[Ashu Roy:]

Okay. Rough number is, if someone was paying us $100 of annual support, they would pay a total of $200 rough every year, which would include that support, et cetera, everything now wrapped into the subscription model.

[Jeff Van Rhee:]

Yeah, got it. Okay. And then just a couple others. Any color you can provide on understanding the overall bookings number, it has got its flaws, we've now got a new cloud ACV number, we've got an overall cloud ACV number. Within those three metrics, can you give us a little better sense of how you're thinking about those in dollars absolute growth trends? Any incremental color there would be great.

[Ashu Roy:]

You want to talk about that, Eric?

[Eric Smit:]

So, Jeff, maybe if you can elaborate a little bit more on that, just from a, are you talking about absolute dollars terms, is that --?

[Jeff Van Rhee:]

Yeah, just how you're thinking about, say, cloud ACV growth, you know, as we get to, say, the end of fiscal 2017, you know, versus 2016, or the new cloud bookings numbers. I mean, just a little better semblance of how you're thinking about those two would be helpful.

[Eric Smit:]

So I think at the moment, I think to Ashu's point, the -- if you look at the current levels of investment that we have in sales and marketing, we're striving towards, at this stage, increasing the productivity to a level, to a point where we start increasing the investment maybe towards the second half of the year. So to that extent, you know, again we expect this number to grow, but at this point aren't looking to provide a specific number to what that is, because part of that's going to be a function of how much do we look to invest in this business to maybe accelerate that growth in the back half of the year.

[Jeff Van Rhee:]

Okay. Then just one last one to follow on to that, sales capacity. Where are you in headcount now, how many of those are, say, better than two years of tenure and how are you budgeting for 2017?

[Ashu Roy:]

So we ended up the -- so we have, and I'm giving you rough numbers right now because there is flux going on, but we have roughly 30 quota-carrying reps right now. That number is somewhat fluctuating between 30 and 32. And our goal is to, as Eric said, get the productivity working well and then to scale from there. So that's kind of where we are now. My expectation is that the first two quarters of fiscal 2017, we'll probably maintain the current level of the run rate of Q4 sales and marketing, is where we leap for the first two quarters, and then we think that we would have the opportunity to scale and invest more on sales and marketing in the third and fourth quarters.

[Jeff Van Rhee:]

And just within those, what percent of those 30 reps now have a couple years of tenure?

[Ashu Roy:]

Roughly 50% now.

[Jeff Van Rhee:]

Okay. Okay, I'll let somebody else jump on. Thank you.

[Ashu Roy:]

Okay. Thanks.

[Operator:]

[Operator Instructions] We'll hear next from Mark Schappel with Benchmark.

[Mark Schappel:]

Hi, good evening. Thanks for taking my question. Ash, starting with you. In your prepared remarks I believe you mentioned that you expect a $5 million reduction in ACV in January from a certain customer. Just wondering if you could just go into a little more detail on that.

[Ashu Roy:]

Sure. So this is a customer who is choosing to go the other route, in other words, go from cloud back to on-premise. We don't have any other customer who's gone back in the last several years but this is a big customer that we work with. And they'll still continue to use our products on premise, but we will be giving up on the cloud part of the business. And they'll also be reducing the level of use that they have of our products when they go back into the on-premise model.

[Mark Schappel:]

Okay, thank you. That's helpful. And then if I recall correctly, about a year or so ago, I think turnover in the sales force, let's just say, was above average or much higher than normal. I was wondering if you could just speak to the stability of the sales force that you've seen in the last, you know, quarter or two and maybe some of the changes that you're making there.

[Ashu Roy:]

Sure. So a couple of things I'll comment. One is that I think the reorganization took some tme to settle down and I think we are at least through the first wave of change and organization is in place in terms of the new direct channel and expand teams. That part is good. I do believe that we will and you will continue to look at performance-based changes. But at this time we feel that this level of performance is sort of much better than the way we were six months ago and this is our target for the next six months. So I guess what I'm saying is that we will continue to have some change in the sales organization over the next six to nine months.

[Mark Schappel:]

Right. And then one last question here, on last quarter's call I believe you mentioned -- or spent some time going through the relatively new Avaya partnership. And I know it's early days, but I was wondering if you've seen any traction yet there, or maybe [inaudible]?

[Ashu Roy:]

We are working on it, we're excited about it, but we don't have results to share yet. But it's an area that we see as an opportunity but we don't have results to share.

[Mark Schappel:]

Great. Thank you. That's all for me.

[Operator:]

[Operator Instructions] We will take our next question from Jon Hickman with Ladenburg.

[Jon Hickman:]

Hi. Can you hear me okay? You made a comment about you felt your halfway through your transition to the cloud. Can you tell me like what are you basing that on? Is it customer percentage or revenue percentage or what?

[Ashu Roy:]

My way of looking at it is, once we get to that 80% of our bookings coming from cloud, I would say that the business would substantially operate like a cloud business. And that's how I'm thinking of the milestone.

[Jon Hickman:]

Okay. Okay. So I have another question with you about the $5 million. Is that going to all hit in the January quarter?

[Ashu Roy:]

No. It -- so, roughly, so for the fiscal year, it's going to be half of that, because it's -- the reduction will take effect in January, middle of January, and therefore the 1.25, roughly 1.25 million in Q3 and 1.25 million in Q4.

[Jon Hickman:]

Okay. Thank you. That's it for me.

[Ashu Roy:]

Sure.

[Operator:]

[Operator Instructions] It appears there are no further questions at this time. I will turn the call now back to the eGain management for closing remarks.

[Ashu Roy:]

Thank you all for listening in to our end-of-year conference call, and we look forward to updating you. Just as a reminder, we are hosting our North America Digital Day in Chicago on October 11. Details are on our website, egain.com. We would love to have you all come in and see what we have to talk about in terms of new innovation and customer successes and a great opportunity to learn about what we're doing with clients and how businesses are using our solutions. So I hope to see some of you at that event. Thank you.

[Operator:]

This does conclude today's conference. We thank you for your participation. You may now disconnect.