1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Organization and Nature of Business
eGain Corporation (eGain, the Company, our, we or us) automates customer engagement with an innovative knowledge hub, powered by conversational artificial intelligence (AI) and analytics. We sell mostly to large enterprises across financial services, telecommunications, retail, government, healthcare, and utilities seeking to better serve customers at scale while coping with content silos, process complexity, and regulatory compliance. With our mantra of AX + BX + CX = DX\u2122, we guide clients to effortless digital experience (DX) by holistically optimizing agent experience (AX), business experience (BX), and customer experience (CX). Leading brands use eGain\u2019s cloud software to improve customer satisfaction, empower agents, reduce service cost, and boost sales. We are headquartered in the United States. We also operate in the United Kingdom and India.
Fiscal Year
The Company fiscal year ends on June 30. References to fiscal year 2024 refers to fiscal year ending June 30, 2024.
Basis of Presentation
The accompanying condensed consolidated balance sheet as of March 31, 2024 and the condensed consolidated statements of operations, comprehensive income (loss), stockholders\u2019 equity, and cash flows for the three and nine months ended March 31, 2024 and 2023 are unaudited. \u00a0The condensed consolidated balance sheet as of June 30, 2023 was derived from audited consolidated financial statements as of that date but does not include all the information and footnotes required by GAAP for complete financial statements.
Certain information and footnote disclosures, normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles (GAAP), have been condensed or omitted pursuant to such rules and regulations although we believe that the disclosures made are adequate to make the information not misleading. In our opinion, the unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of our financial position, results of operations, and cash flows for the periods presented.
These condensed consolidated financial statements and notes should be read in conjunction with our audited consolidated financial statements and accompanying notes for the fiscal year ended June 30, 2023, included in our Annual Report on Form 10-K. The results of our operations for the interim periods presented are not necessarily indicative of results that may be expected for any other interim period or for the full fiscal year ending June 30, 2024.
Principles of Consolidation
We prepared the condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC) and included the accounts of our wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated.
Use of Estimates
The preparation of financial statements requires us to make estimates and assumptions in the condensed consolidated financial statements and accompanying notes. Actual results could differ significantly from estimates. We make estimates that we believe to be reasonable based on historical experience and other assumptions. Significant estimates and assumptions made by management include the following:
| \u25cf | Standalone selling price (SSP) of performance obligations for contracts with multiple performance obligations; |
| \u25cf | Estimate of variable consideration for performance obligations in connection with Topic 606; |
| \u25cf | Period of benefit associated with capitalized costs to obtain revenue contracts; |
| \u25cf | Valuation, measurement and recognition of current and deferred income taxes; |
| \u25cf | Fair value of stock-based awards; and |
| \u25cf | Lease term and incremental borrowing rate for lease liabilities. |
Recent Accounting Pronouncements
Pronouncements Recently Adopted
In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which requires measurement and recognition of expected credit losses for financial assets held at the reporting date based on internal information, external information, or a combination of both relating to past events, current conditions, and reasonable and supportable forecasts. ASU No. 2016-13 replaces the existing incurred loss impairment model with a forward-looking expected credit loss model, which will result in earlier recognition of credit losses. We adopted this guidance as of our first quarter of fiscal year 2024 with no material impact on our condensed consolidated financial statements.
Revenue Recognition
Revenue Recognition Policy
Our revenue is comprised of two categories including subscription and professional services. Subscription includes SaaS revenue and legacy revenue. SaaS revenue includes cloud delivery arrangements, term licenses, embedded original equipment manufacturer (OEM) royalties, and associated support. Legacy revenue 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.
Significant Judgment Applied in the Determination of Revenue Recognition
We enter into contractual arrangements with customers that may include promises to transfer multiple services, such as subscription, support, and professional services. With respect to our business, a performance obligation is a promise to transfer a service to a customer that is distinct. Significant judgment is required to determine whether services are distinct performance obligations that should be accounted for separately or combined as one unit of accounting. Additionally, significant judgment is required to determine the timing of revenue recognition.
We allocate the transaction price to each performance obligation based on relative SSP basis. The SSP is the price at which we would sell a promised service separately to one of our customers. Judgment is required to determine the SSP for each distinct performance obligation.
We determine the SSP by considering our pricing objectives in relation to market demand. Consideration is placed based on our history of discounting prices, size and volume of transactions involved, customer demographics and geographic locations, price lists, contract prices, and our market strategy.
Determination of Revenue Recognition
Under Topic 606, we recognize revenue upon the transfer of control of promised services to our customers in the amount that is commensurate with the consideration that we expect to receive in exchange for those services. If consideration includes a variable amount in the arrangement, such as service level credits or contingent fees, then we include an estimate of the amount that we expect to receive for the total transaction price.
The amount of revenue that we recognize is based on (i) identifying the contract with a customer; (ii) identifying the performance obligations in the contract; (iii) determining the transaction price; (iv) allocating the transaction price to the performance obligations in the contract on a relative SSP basis; and (v) recognizing revenue when, or as, we satisfy each performance obligation in the contract typically through delivery or when control is transferred to the customer.
Subscription Revenue
The following customer arrangements are recognized ratably over the contract term as the performance obligations are delivered:
| \u25cf | Cloud delivery arrangements; |
| \u25cf | Maintenance and support arrangements; and |
| \u25cf | Term licenses which incorporate on-premise software licenses and a subscription to substantial cloud functionalities. |
For contracts involving distinct software licenses, the license performance obligation is satisfied at a point in time when control is transferred to the customer.
We typically invoice our customers in advance upon execution of the contract or subsequent renewals with payment terms between 30 and 45 days. Invoiced amounts are recorded in accounts receivable, deferred revenue or revenue, depending if control transferred to our customers based on each arrangement.
The Company has a royalty revenue agreement with a customer related to the Company\u2019s embedded intellectual property. \u00a0Under the terms of the agreement, the customer is to provide to the Company a combination of fixed fee, per agent fee, for each software license sold containing the embedded software. These embedded OEM royalties are included as subscription revenue. Under Topic 606 revenue guidance, since these arrangements are for usage-based licenses of intellectual property, for which the guidance in paragraph ASC 606-10-55-65 applies, the Company estimates revenue recognized only as the performance obligation of the OEM royalties has been satisfied or partially satisfied. Differences between actual results and estimated amounts are adjusted in the following period as such sales are reported by the customer with a quarter in arrears.
Professional Services Revenue
Professional services revenue includes system implementation, consulting, training, and managed services. The transaction price is allocated to various performance obligations based on their SSP. Revenue allocated to each performance obligation is recognized at the earlier of satisfaction of discrete performance obligations, or as work is performed on a time and material basis. Managed services include a comprehensive set of processes and activities that range from implementation to monitoring the evolution and support of eGain solutions in a company. Our consulting and implementation service contracts are bid either on a time-and-material basis or on a fixed-fee basis. Managed services contracts are bid on a time-and-material basis. Fixed fees are generally paid upon milestone billing or customer acceptance at pre-determined points in the contract. Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue or revenue, depending on whether transfer of control to customers has occurred.
Training revenue that meets the criteria to be accounted for separately is recognized when training is provided.
Contracts with Multiple Performance Obligations
The Company enters into contracts that can include various combinations of subscriptions, professional services and maintenance and support, which are generally distinct and accounted for as separate performance obligations. For contracts with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation on a relative basis using the respective SSP for each performance obligation.
Costs Capitalized to Obtain Revenue Contracts, Net
Under Topic 606, we capitalize incremental costs of obtaining non-cancelable subscription and support revenue contracts. The capitalized amounts consist primarily of sales commissions paid to our direct sales force. Capitalized amounts also include (i) amounts paid to employees other than the direct sales force who earn incentive payouts under annual compensation plans that are tied to the value of contracts acquired and (ii) the associated payroll taxes and fringe benefit costs associated with the payments to our employees.
Costs capitalized related to new revenue contracts are generally deferred and amortized on a straight-line basis over a period of benefit that we estimate to be five years. We determine the period of benefit by taking into consideration the historical and expected durations of our customer contracts, the expected useful lives of our technologies, and other factors. Commissions for renewal contracts relating to our cloud-based arrangements are expensed when incurred, as we do not consider renewal contracts to be commensurate with initial customer contracts. Historically, any commission associated with renewals have been immaterial. Amortization of costs to obtain revenue contracts is included as a component of sales and marketing expenses in our condensed consolidated statements of operations.
During the three and nine months ended March 31, 2024, we capitalized $36,000 and $522,000 of costs to obtain revenue contracts, respectively, and amortized $325,000 and $1.2 million to sales and marketing expense, respectively.
During the three and nine months ended March 31, 2023, we capitalized $6,000 and $415,000 of costs to obtain revenue contracts, respectively, and amortized $381,000 and $1.2 million to sales and marketing expense, respectively.
Capitalized costs to obtain revenue contracts, net were $3.0 million and $3.6 million as of March 31, 2024 and June 30, 2023, respectively, on our condensed consolidated balance sheets.
Deferred Revenue
Deferred revenue primarily consists of payments received in advance of revenue recognition from cloud, term and ratable licenses, and maintenance and support services and is recognized as the revenue recognition criteria are met. We generally invoice customers in annual or quarterly installments. The deferred revenue balance does not represent the total contract value of annual or multi-year, non-cancelable cloud or maintenance and support agreements. Deferred revenue is influenced by several factors, including seasonality, the compounding effects of renewals, invoice duration, invoice timing, and new business linearity within the financial reporting period.
Segment Information
We operate in one segment - the development, license, implementation, and support of our customer service infrastructure software solutions. Operating segments are identified as components of an enterprise for which discrete financial information is available and regularly reviewed by our chief operating decision-maker in order to make decisions about resources to be allocated to the segment and assess its performance. Our chief operating decision-makers under ASC 280, Segment Reporting, are our executive management team. Our chief operating decision-makers review financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance.
Our revenue is derived from North America and combined Europe, Middle East, and Africa (EMEA) and is disclosed in Note 2. However, we incur operating expenses in the North America, EMEA, and Asia Pacific regions.
The following table presents our income (loss) from operations among our three operating regions (in thousands):
Three Months Ended | Nine Months Ended | ||||||||||
March\u00a031,\u00a0 | March\u00a031,\u00a0 | ||||||||||
2024 | \u00a0\u00a0\u00a0\u00a0 | 2023 | 2024 | \u00a0\u00a0\u00a0\u00a0 | 2023 | ||||||
Income (loss) from operations: | |||||||||||
North America | $ | 1,085 | $ | (297) | $ | 5,039 | $ | (917) | |||
Europe, Middle East, & Africa | \u00a0 | 1,416 | \u00a0 | 1,256 | \u00a0 | 4,607 | \u00a0 | 4,792 | |||
Asia Pacific | \u00a0 | (1,563) | \u00a0 | (1,471) | \u00a0 | (4,867) | \u00a0 | (4,844) | |||
Income (loss) from operations | $ | 938 | $ | (512) | $ | 4,779 | $ | (969) |
The following table presents our long-lived assets, corresponding to our geographic areas are as follows (in thousands):
March\u00a031,\u00a0 | June\u00a030,\u00a0 | |||||
\u00a0\u00a0\u00a0\u00a0 | 2024 | \u00a0\u00a0\u00a0\u00a0 | 2023 | |||
Long-lived assets: | ||||||
North America | $ | 244 | $ | 358 | ||
Europe, Middle East, & Africa | \u00a0 | 97 | \u00a0 | 131 | ||
Asia Pacific | \u00a0 | 142 | \u00a0 | 144 | ||
Long-lived assets | $ | 483 | $ | 633 |
For the purposes of entity-wide geographic area disclosures, long-lived assets consist of computers and equipment, furniture and fixtures, and leasehold improvements, net of accumulated depreciation and amortization. These items are included in property and equipment, net, on the accompanying Company\u2019s condensed consolidated balance sheets.
Concentration of Credit Risk and Significant Customers
Our financial instruments that are exposed to concentrations of credit risk include cash and cash equivalents, restricted cash, and accounts receivable. We complement direct sales with resell partnerships based on product connectors into cloud contact center platforms. We also partner with system integrators and managed service providers. Two customers, who are also partners, accounted for more than 10% of total revenue during the three and nine months ended March 31, 2024. One of such partners accounted for more than 10% of total revenue during the three and nine months ended March 31, 2023. Two customers accounted for more than 10% of our gross accounts receivable balance as of March 31, 2024.
Accounts Receivable and Provision for Credit Losses
We extend unsecured credit to our customers on a regular basis. Our accounts receivable are 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. We write off a receivable after collection efforts have been exhausted and the amount is deemed uncollectible. Recovered written off receivables are recorded as they occur.
In certain revenue contracts, contractual billings do not coincide with revenue recognized on the contract. Unbilled accounts receivables (contract assets) are recorded when revenue recognized on the contract exceeds billings, pursuant to contract provisions, and become billable upon certain criteria being met. Unbilled accounts receivables, for which the Company has the unconditional right to consideration, totaled $1.3 million and $1.7 million as of March 31, 2024 and June 30, 2023, respectively, and are included in the accounts receivable, less provision for credit losses, balance on the accompanying condensed consolidated balance sheets.
As of fiscal year 2024, we adopted ASU 2016-13 - Measurement of Credit Losses on Financial Instruments with no material impact on our condensed consolidated financial statements.
Stock-Based Compensation
We account for stock-based compensation in accordance with ASC 718, Compensation\u2014Stock 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 expense over the vesting period, net of expected forfeitures. Stock-based compensation expense consists of expenses for stock options, restricted stock units (RSUs), and discounted employee common stock granted under our Amended and Restated 2005 Management Stock Option Plan, our Amended and Restated 2005 Stock Incentive Plan, and our 2017 Employee Stock Purchase Plan (ESPP).
The ESPP provides that eligible employees may purchase the Company\u2019s common stock through payroll deductions at a price equal to 85% of the lower of the fair market value at the entry date of the applicable offering period or at the end of each applicable purchasing period. The offering period, meaning a period with respect to which the right to purchase shares of our common stock may be granted under the ESPP, will not exceed twenty-seven months and consist of a series of six-month purchase periods. Eligible employees may join the ESPP at the beginning of any six-month purchase period. Under the terms of the ESPP, employees can choose to have between 1% and 15% of their base earnings withheld to purchase the Company\u2019s common stock. \u00a0
Determining the fair value of the stock-based awards at the grant date requires significant judgment and the use of estimates, particularly surrounding Black-Scholes valuation assumptions such as stock price volatility and expected option term.
Below is a summary of stock-based compensation included in the costs and expenses (in thousands):
Three Months Ended | Nine Months Ended | |||||||||||
March\u00a031,\u00a0 | March\u00a031,\u00a0 | |||||||||||
\u00a0\u00a0\u00a0\u00a0 | 2024 | \u00a0\u00a0\u00a0\u00a0 | 2023 | 2024 | \u00a0\u00a0\u00a0\u00a0 | 2023 | ||||||
Stock-based compensation expense: |
|
| ||||||||||
Cost of revenue | $ | 343 |
| $ | 371 | $ | 924 |
| $ | 1,213 | ||
Research and development | \u00a0 | 331 |
| \u00a0 | 509 | \u00a0 | 1,095 |
| \u00a0 | 1,633 | ||
Sales and marketing | \u00a0 | 120 |
| \u00a0 | 174 | \u00a0 | 476 |
| \u00a0 | 997 | ||
General and administrative | \u00a0 | 316 |
| \u00a0 | 393 | \u00a0 | 1,018 |
| \u00a0 | 1,440 | ||
Total stock-based compensation expense | $ | 1,110 |
| $ | 1,447 | $ | 3,513 |
| $ | 5,283 |
Total stock-based compensation includes expense related to non-employee awards of $26,000 and $77,000 during the three and nine months ended March 31, 2024, respectively.
Total stock-based compensation includes expense related to non-employee awards of $31,000 and $113,000 during the three and nine months ended March 31, 2023, respectively.
Total stock-based compensation includes expense related to the ESPP of $102,000 and $268,000 for the three and nine months ended March 31, 2024, respectively. Total stock-based compensation includes expense related to the ESPP of $115,000 and $305,000 for the three and nine months ended March 31, 2023, respectively.
We utilize the Black-Scholes valuation model for estimating the fair value of the stock-based compensation of options granted and ESPP stock purchase rights. All shares of our common stock issued pursuant to our stock option, RSUs, and ESPP plans are only issued out of an authorized reserve of shares of common stock which were previously registered with the SEC on Registration Statements on Form S-8.
During the three months ended March 31, 2024 and 2023, we granted options to purchase 9,600 and 22,300 shares of common stock with a weighted-average fair value of $3.17 and $4.66 per share, respectively.
During the nine months ended March 31, 2024 and 2023, we granted options to purchase 60,000 and 176,367 shares of common stock with a weighted-average fair value of $3.27 and $4.77 per share, respectively.
We used the following weighted-average assumptions as inputs into the Black-Scholes valuation model to estimate the fair value of the options granted:
Three Months Ended | Nine Months Ended | |||||||||
March\u00a031,\u00a0 | March\u00a031,\u00a0 | |||||||||
\u00a0\u00a0\u00a0\u00a0 | 2024 | \u00a0\u00a0\u00a0\u00a0 | 2023 | 2024 | \u00a0\u00a0\u00a0\u00a0 | 2023 | \u00a0 | |||
Expected volatility | 55 | %\u00a0\u00a0 | 63 | %\u00a0\u00a0 | 54 | %\u00a0\u00a0 | 64 | % | ||
Average risk-free interest rate | 4.12 | %\u00a0\u00a0 | 3.80 | %\u00a0\u00a0 | 4.32 | %\u00a0\u00a0 | 3.53 | % | ||
Expected life (in years) | 4.56 | 4.94 | 4.55 |
| 4.65 |
| ||||
Dividend yield | \u2014 |
| \u2014 |
| \u2014 |
| \u2014 |
|
The dividend yield of zero is based on the fact that we have never paid cash dividends and have no present intention to pay cash dividends. We determined the appropriate measure of expected volatility by reviewing historic volatility in the share price of our common stock, as adjusted for certain events that management deemed to be non-recurring and non-indicative of future events. The risk-free interest rate is derived from the average U.S. Treasury Strips rate with maturities approximating the expected lives of the awards during the period, which approximate the rate in effect at the time of the grant.
On December 1, 2023, employees were granted the right to purchase an aggregate of 87,332 shares under the ESPP, and compensation expense related to those purchase rights for the three and nine months ended March 31, 2024 was $102,000 and $136,000, respectively.
On December 1, 2022, employees were granted the right to purchase an aggregate of 88,414 shares under the ESPP, and compensation expense related to those purchase rights for the three and nine months ended March 31, 2023 was $115,000 and $156,000, respectively.
As of March 31, 2024, there were 868,129 shares of common stock available for issuance under the ESPP. \u00a0
We base our estimate of expected life of a stock option on the historical exercise behavior and cancellations of all past option grants made by the Company during the time period which its equity shares have been publicly traded, the contractual term of the option, the vesting period and the expected remaining term of the outstanding options.
In accordance with ASU 2016-09, Compensation\u2014Stock Compensation: Improvements to Employee Share-Based Accounting, we elected to continue to estimate forfeitures in the calculation of stock-based compensation expense.
As of March 31, 2024, there was approximately $1.9 million of total unrecognized compensation cost, net of expected forfeitures, related to unvested stock options, which is expected to be recognized over the weighted-average period of 0.9 years. There were 60,992 and 35,850 options exercised during the three months ended March 31, 2024 and 2023, respectively. There were 184,492 and 165,011 options exercised during the nine months ended March 31, 2024 and 2023, respectively.
As of March 31, 2024, there was approximately $888,000 of total unrecognized compensation cost, net of expected forfeitures, related to unvested RSUs, which is expected to be recognized over the weighted-average period of 0.6 years. There were no RSUs granted during the three months ended March 31, 2024. There were 200,821 RSUs granted during the nine months ended March 31, 2024, with a weighted average grant date fair value of $7.55 per share. No RSUs were granted during the three and nine months ended March 31, 2023.
Leases
Lease agreements are evaluated to determine whether an arrangement is or contains a lease in accordance with ASC 842, Leases.
Operating leases are included in operating lease right-of-use (ROU) assets, current operating lease liabilities, and noncurrent operating lease liabilities in the condensed consolidated financial statements. ROU assets represent the Company\u2019s right to use leased assets over the agreed upon term. Lease liabilities represent the Company\u2019s contractual obligation to make lease payments over the lease term.
For operating leases, ROU assets and lease liabilities are recognized at the commencement date of the lease. The lease liability is measured as the present value of the lease payments over the lease term, using the rate implicit in the lease if readily determinable. If the rate implicit in the lease cannot be readily determined, the Company uses its incremental borrowing rate at lease commencement. The operating lease ROU assets are calculated as the present value of the remaining lease payments plus unamortized initial direct costs and any prepayments, less unamortized lease incentives received.
Operating leases typically include non-lease components such as common-area maintenance costs. We have elected to include non-lease components with lease payments for the purpose of calculating lease ROU assets and liabilities, to the extent that they are fixed. Non-lease component payments that are not fixed are expensed as incurred as variable lease payments.
Lease terms may include renewal or extension options to the extent they are reasonably certain to be exercised. The assessment of whether renewal or extension options are reasonably certain to be exercised is made at lease commencement. Factors considered in determining whether an option is reasonably certain of exercise include, but are not limited to, the value of any leasehold improvements, the value of renewal rates compared to market rates, and the presence of factors that would cause a significant economic penalty to the Company if the option were not exercised. Lease expense is recognized on a straight-line basis over the lease term. The Company has elected not to recognize ROU assets and obligations for leases with an initial term of twelve months or less, and has applied a capitalization threshold to recognize a lease on the condensed consolidated balance sheet. The expense associated with short-term leases and leases that do not meet the Company\u2019s capitalization threshold are recorded to lease expense in the period it is incurred. \u00a0
Goodwill
We review goodwill annually for impairment or sooner whenever events or changes in circumstances indicate that it may be impaired. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit. We operate under a single reporting unit and accordingly, all of our goodwill is associated with the entire company. We had no indicators of impairment during the three and nine months ended March 31, 2024.
"}]},{"name":"rpt:f-404","factDimensions":{"xbrl:concept":"us-gaap:NatureOfOperations","xbrl:period":"2023-07-01T00:00:00/2024-04-01T00:00:00","xbrl:entity":"cik:0001066194"},"factValues":[{"value":"Organization and Nature of Business
eGain Corporation (eGain, the Company, our, we or us) automates customer engagement with an innovative knowledge hub, powered by conversational artificial intelligence (AI) and analytics. We sell mostly to large enterprises across financial services, telecommunications, retail, government, healthcare, and utilities seeking to better serve customers at scale while coping with content silos, process complexity, and regulatory compliance. With our mantra of AX + BX + CX = DX\u2122, we guide clients to effortless digital experience (DX) by holistically optimizing agent experience (AX), business experience (BX), and customer experience (CX). Leading brands use eGain\u2019s cloud software to improve customer satisfaction, empower agents, reduce service cost, and boost sales. We are headquartered in the United States. We also operate in the United Kingdom and India.
"}]},{"name":"rpt:f-405","factDimensions":{"xbrl:concept":"us-gaap:FiscalPeriod","xbrl:period":"2023-07-01T00:00:00/2024-04-01T00:00:00","xbrl:entity":"cik:0001066194"},"factValues":[{"value":"Fiscal Year
The Company fiscal year ends on June 30. References to fiscal year 2024 refers to fiscal year ending June 30, 2024.
"}]},{"name":"rpt:f-406","factDimensions":{"xbrl:concept":"us-gaap:BasisOfAccountingPolicyPolicyTextBlock","xbrl:period":"2023-07-01T00:00:00/2024-04-01T00:00:00","xbrl:entity":"cik:0001066194"},"factValues":[{"value":"Basis of Presentation
The accompanying condensed consolidated balance sheet as of March 31, 2024 and the condensed consolidated statements of operations, comprehensive income (loss), stockholders\u2019 equity, and cash flows for the three and nine months ended March 31, 2024 and 2023 are unaudited. \u00a0The condensed consolidated balance sheet as of June 30, 2023 was derived from audited consolidated financial statements as of that date but does not include all the information and footnotes required by GAAP for complete financial statements.
Certain information and footnote disclosures, normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles (GAAP), have been condensed or omitted pursuant to such rules and regulations although we believe that the disclosures made are adequate to make the information not misleading. In our opinion, the unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of our financial position, results of operations, and cash flows for the periods presented.
These condensed consolidated financial statements and notes should be read in conjunction with our audited consolidated financial statements and accompanying notes for the fiscal year ended June 30, 2023, included in our Annual Report on Form 10-K. The results of our operations for the interim periods presented are not necessarily indicative of results that may be expected for any other interim period or for the full fiscal year ending June 30, 2024.
"}]},{"name":"rpt:f-407","factDimensions":{"xbrl:concept":"us-gaap:ConsolidationPolicyTextBlock","xbrl:period":"2023-07-01T00:00:00/2024-04-01T00:00:00","xbrl:entity":"cik:0001066194"},"factValues":[{"value":"Principles of Consolidation
We prepared the condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC) and included the accounts of our wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated.
"}]},{"name":"rpt:f-408","factDimensions":{"xbrl:concept":"us-gaap:UseOfEstimates","xbrl:period":"2023-07-01T00:00:00/2024-04-01T00:00:00","xbrl:entity":"cik:0001066194"},"factValues":[{"value":"Use of Estimates
The preparation of financial statements requires us to make estimates and assumptions in the condensed consolidated financial statements and accompanying notes. Actual results could differ significantly from estimates. We make estimates that we believe to be reasonable based on historical experience and other assumptions. Significant estimates and assumptions made by management include the following:
| \u25cf | Standalone selling price (SSP) of performance obligations for contracts with multiple performance obligations; |
| \u25cf | Estimate of variable consideration for performance obligations in connection with Topic 606; |
| \u25cf | Period of benefit associated with capitalized costs to obtain revenue contracts; |
| \u25cf | Valuation, measurement and recognition of current and deferred income taxes; |
| \u25cf | Fair value of stock-based awards; and |
| \u25cf | Lease term and incremental borrowing rate for lease liabilities. |
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Recent Accounting Pronouncements
Pronouncements Recently Adopted
In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which requires measurement and recognition of expected credit losses for financial assets held at the reporting date based on internal information, external information, or a combination of both relating to past events, current conditions, and reasonable and supportable forecasts. ASU No. 2016-13 replaces the existing incurred loss impairment model with a forward-looking expected credit loss model, which will result in earlier recognition of credit losses. We adopted this guidance as of our first quarter of fiscal year 2024 with no material impact on our condensed consolidated financial statements.
"}]},{"name":"rpt:f-410","factDimensions":{"xbrl:concept":"us-gaap:RevenueFromContractWithCustomerPolicyTextBlock","xbrl:period":"2023-07-01T00:00:00/2024-04-01T00:00:00","xbrl:entity":"cik:0001066194"},"factValues":[{"value":"Revenue Recognition
Revenue Recognition Policy
Our revenue is comprised of two categories including subscription and professional services. Subscription includes SaaS revenue and legacy revenue. SaaS revenue includes cloud delivery arrangements, term licenses, embedded original equipment manufacturer (OEM) royalties, and associated support. Legacy revenue 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.
Significant Judgment Applied in the Determination of Revenue Recognition
We enter into contractual arrangements with customers that may include promises to transfer multiple services, such as subscription, support, and professional services. With respect to our business, a performance obligation is a promise to transfer a service to a customer that is distinct. Significant judgment is required to determine whether services are distinct performance obligations that should be accounted for separately or combined as one unit of accounting. Additionally, significant judgment is required to determine the timing of revenue recognition.
We allocate the transaction price to each performance obligation based on relative SSP basis. The SSP is the price at which we would sell a promised service separately to one of our customers. Judgment is required to determine the SSP for each distinct performance obligation.
We determine the SSP by considering our pricing objectives in relation to market demand. Consideration is placed based on our history of discounting prices, size and volume of transactions involved, customer demographics and geographic locations, price lists, contract prices, and our market strategy.
Determination of Revenue Recognition
Under Topic 606, we recognize revenue upon the transfer of control of promised services to our customers in the amount that is commensurate with the consideration that we expect to receive in exchange for those services. If consideration includes a variable amount in the arrangement, such as service level credits or contingent fees, then we include an estimate of the amount that we expect to receive for the total transaction price.
The amount of revenue that we recognize is based on (i) identifying the contract with a customer; (ii) identifying the performance obligations in the contract; (iii) determining the transaction price; (iv) allocating the transaction price to the performance obligations in the contract on a relative SSP basis; and (v) recognizing revenue when, or as, we satisfy each performance obligation in the contract typically through delivery or when control is transferred to the customer.
Subscription Revenue
The following customer arrangements are recognized ratably over the contract term as the performance obligations are delivered:
| \u25cf | Cloud delivery arrangements; |
| \u25cf | Maintenance and support arrangements; and |
| \u25cf | Term licenses which incorporate on-premise software licenses and a subscription to substantial cloud functionalities. |
For contracts involving distinct software licenses, the license performance obligation is satisfied at a point in time when control is transferred to the customer.
We typically invoice our customers in advance upon execution of the contract or subsequent renewals with payment terms between 30 and 45 days. Invoiced amounts are recorded in accounts receivable, deferred revenue or revenue, depending if control transferred to our customers based on each arrangement.
The Company has a royalty revenue agreement with a customer related to the Company\u2019s embedded intellectual property. \u00a0Under the terms of the agreement, the customer is to provide to the Company a combination of fixed fee, per agent fee, for each software license sold containing the embedded software. These embedded OEM royalties are included as subscription revenue. Under Topic 606 revenue guidance, since these arrangements are for usage-based licenses of intellectual property, for which the guidance in paragraph ASC 606-10-55-65 applies, the Company estimates revenue recognized only as the performance obligation of the OEM royalties has been satisfied or partially satisfied. Differences between actual results and estimated amounts are adjusted in the following period as such sales are reported by the customer with a quarter in arrears.
Professional Services Revenue
Professional services revenue includes system implementation, consulting, training, and managed services. The transaction price is allocated to various performance obligations based on their SSP. Revenue allocated to each performance obligation is recognized at the earlier of satisfaction of discrete performance obligations, or as work is performed on a time and material basis. Managed services include a comprehensive set of processes and activities that range from implementation to monitoring the evolution and support of eGain solutions in a company. Our consulting and implementation service contracts are bid either on a time-and-material basis or on a fixed-fee basis. Managed services contracts are bid on a time-and-material basis. Fixed fees are generally paid upon milestone billing or customer acceptance at pre-determined points in the contract. Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue or revenue, depending on whether transfer of control to customers has occurred.
Training revenue that meets the criteria to be accounted for separately is recognized when training is provided.
Contracts with Multiple Performance Obligations
The Company enters into contracts that can include various combinations of subscriptions, professional services and maintenance and support, which are generally distinct and accounted for as separate performance obligations. For contracts with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation on a relative basis using the respective SSP for each performance obligation.
"}]},{"name":"rpt:f-411","factDimensions":{"xbrl:concept":"egan:NumberOfRevenueCategories","xbrl:period":"2023-07-01T00:00:00/2024-04-01T00:00:00","xbrl:entity":"cik:0001066194","xbrl:unit":"egan:category"},"factValues":[{"value":"2"}]},{"name":"rpt:f-412","factDimensions":{"xbrl:concept":"egan:RevenuePaymentTermMinimum","xbrl:period":"2023-07-01T00:00:00/2024-04-01T00:00:00","xbrl:entity":"cik:0001066194"},"factValues":[{"value":"P30D"}]},{"name":"rpt:f-413","factDimensions":{"xbrl:concept":"egan:RevenuePaymentTermMaximum","xbrl:period":"2023-07-01T00:00:00/2024-04-01T00:00:00","xbrl:entity":"cik:0001066194"},"factValues":[{"value":"P45D"}]},{"name":"rpt:f-414","factDimensions":{"xbrl:concept":"us-gaap:CommissionsExpensePolicyPolicyTextBlock","xbrl:period":"2023-07-01T00:00:00/2024-04-01T00:00:00","xbrl:entity":"cik:0001066194"},"factValues":[{"value":"Costs Capitalized to Obtain Revenue Contracts, Net
Under Topic 606, we capitalize incremental costs of obtaining non-cancelable subscription and support revenue contracts. The capitalized amounts consist primarily of sales commissions paid to our direct sales force. Capitalized amounts also include (i) amounts paid to employees other than the direct sales force who earn incentive payouts under annual compensation plans that are tied to the value of contracts acquired and (ii) the associated payroll taxes and fringe benefit costs associated with the payments to our employees.
Costs capitalized related to new revenue contracts are generally deferred and amortized on a straight-line basis over a period of benefit that we estimate to be five years. We determine the period of benefit by taking into consideration the historical and expected durations of our customer contracts, the expected useful lives of our technologies, and other factors. Commissions for renewal contracts relating to our cloud-based arrangements are expensed when incurred, as we do not consider renewal contracts to be commensurate with initial customer contracts. Historically, any commission associated with renewals have been immaterial. Amortization of costs to obtain revenue contracts is included as a component of sales and marketing expenses in our condensed consolidated statements of operations.
During the three and nine months ended March 31, 2024, we capitalized $36,000 and $522,000 of costs to obtain revenue contracts, respectively, and amortized $325,000 and $1.2 million to sales and marketing expense, respectively.
During the three and nine months ended March 31, 2023, we capitalized $6,000 and $415,000 of costs to obtain revenue contracts, respectively, and amortized $381,000 and $1.2 million to sales and marketing expense, respectively.
Capitalized costs to obtain revenue contracts, net were $3.0 million and $3.6 million as of March 31, 2024 and June 30, 2023, respectively, on our condensed consolidated balance sheets.
"}]},{"name":"rpt:f-415","factDimensions":{"xbrl:concept":"us-gaap:CapitalizedContractCostAmortizationPeriod","xbrl:period":"2024-04-01T00:00:00","xbrl:entity":"cik:0001066194","us-gaap:CapitalizedContractCostAxis":"egan:CostsCapitalizedRelatedToNewRevenueContractsMember"},"factValues":[{"value":"P5Y"}]},{"name":"rpt:f-416","factDimensions":{"xbrl:concept":"egan:ContractCostCapitalizedDuringPeriod","xbrl:period":"2024-01-01T00:00:00/2024-04-01T00:00:00","xbrl:entity":"cik:0001066194","xbrl:unit":"iso4217:USD"},"factValues":[{"value":"36000","decimals":-3}]},{"name":"rpt:f-417","factDimensions":{"xbrl:concept":"egan:ContractCostCapitalizedDuringPeriod","xbrl:period":"2023-07-01T00:00:00/2024-04-01T00:00:00","xbrl:entity":"cik:0001066194","xbrl:unit":"iso4217:USD"},"factValues":[{"value":"522000","decimals":-3}]},{"name":"rpt:f-418","factDimensions":{"xbrl:concept":"us-gaap:CapitalizedContractCostAmortization","xbrl:period":"2024-01-01T00:00:00/2024-04-01T00:00:00","xbrl:entity":"cik:0001066194","xbrl:unit":"iso4217:USD"},"factValues":[{"value":"325000","decimals":-3}]},{"name":"rpt:f-419","factDimensions":{"xbrl:concept":"us-gaap:CapitalizedContractCostAmortization","xbrl:period":"2023-07-01T00:00:00/2024-04-01T00:00:00","xbrl:entity":"cik:0001066194","xbrl:unit":"iso4217:USD"},"factValues":[{"value":"1200000","decimals":-5}]},{"name":"rpt:f-420","factDimensions":{"xbrl:concept":"egan:ContractCostCapitalizedDuringPeriod","xbrl:period":"2023-01-01T00:00:00/2023-04-01T00:00:00","xbrl:entity":"cik:0001066194","xbrl:unit":"iso4217:USD"},"factValues":[{"value":"6000","decimals":-3}]},{"name":"rpt:f-421","factDimensions":{"xbrl:concept":"egan:ContractCostCapitalizedDuringPeriod","xbrl:period":"2022-07-01T00:00:00/2023-04-01T00:00:00","xbrl:entity":"cik:0001066194","xbrl:unit":"iso4217:USD"},"factValues":[{"value":"415000","decimals":-3}]},{"name":"rpt:f-422","factDimensions":{"xbrl:concept":"us-gaap:CapitalizedContractCostAmortization","xbrl:period":"2023-01-01T00:00:00/2023-04-01T00:00:00","xbrl:entity":"cik:0001066194","xbrl:unit":"iso4217:USD"},"factValues":[{"value":"381000","decimals":-3}]},{"name":"rpt:f-423","factDimensions":{"xbrl:concept":"us-gaap:CapitalizedContractCostAmortization","xbrl:period":"2022-07-01T00:00:00/2023-04-01T00:00:00","xbrl:entity":"cik:0001066194","xbrl:unit":"iso4217:USD"},"factValues":[{"value":"1200000","decimals":-5}]},{"name":"rpt:f-424","factDimensions":{"xbrl:concept":"us-gaap:CapitalizedContractCostNet","xbrl:period":"2024-04-01T00:00:00","xbrl:entity":"cik:0001066194","xbrl:unit":"iso4217:USD"},"factValues":[{"value":"3000000.0","decimals":-5}]},{"name":"rpt:f-425","factDimensions":{"xbrl:concept":"us-gaap:CapitalizedContractCostNet","xbrl:period":"2023-07-01T00:00:00","xbrl:entity":"cik:0001066194","xbrl:unit":"iso4217:USD"},"factValues":[{"value":"3600000","decimals":-5}]},{"name":"rpt:f-426","factDimensions":{"xbrl:concept":"egan:RevenueRecognitionDeferredRevenuePolicyTextBlock","xbrl:period":"2023-07-01T00:00:00/2024-04-01T00:00:00","xbrl:entity":"cik:0001066194"},"factValues":[{"value":"Deferred Revenue
Deferred revenue primarily consists of payments received in advance of revenue recognition from cloud, term and ratable licenses, and maintenance and support services and is recognized as the revenue recognition criteria are met. We generally invoice customers in annual or quarterly installments. The deferred revenue balance does not represent the total contract value of annual or multi-year, non-cancelable cloud or maintenance and support agreements. Deferred revenue is influenced by several factors, including seasonality, the compounding effects of renewals, invoice duration, invoice timing, and new business linearity within the financial reporting period.
"}]},{"name":"rpt:f-427","factDimensions":{"xbrl:concept":"us-gaap:SegmentReportingPolicyPolicyTextBlock","xbrl:period":"2023-07-01T00:00:00/2024-04-01T00:00:00","xbrl:entity":"cik:0001066194"},"factValues":[{"value":"Segment Information
We operate in one segment - the development, license, implementation, and support of our customer service infrastructure software solutions. Operating segments are identified as components of an enterprise for which discrete financial information is available and regularly reviewed by our chief operating decision-maker in order to make decisions about resources to be allocated to the segment and assess its performance. Our chief operating decision-makers under ASC 280, Segment Reporting, are our executive management team. Our chief operating decision-makers review financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance.
Our revenue is derived from North America and combined Europe, Middle East, and Africa (EMEA) and is disclosed in Note 2. However, we incur operating expenses in the North America, EMEA, and Asia Pacific regions.
The following table presents our income (loss) from operations among our three operating regions (in thousands):
Three Months Ended | Nine Months Ended | ||||||||||
March\u00a031,\u00a0 | March\u00a031,\u00a0 | ||||||||||
2024 | \u00a0\u00a0\u00a0\u00a0 | 2023 | 2024 | \u00a0\u00a0\u00a0\u00a0 | 2023 | ||||||
Income (loss) from operations: | |||||||||||
North America | $ | 1,085 | $ | (297) | $ | 5,039 | $ | (917) | |||
Europe, Middle East, & Africa | \u00a0 | 1,416 | \u00a0 | 1,256 | \u00a0 | 4,607 | \u00a0 | 4,792 | |||
Asia Pacific | \u00a0 | (1,563) | \u00a0 | (1,471) | \u00a0 | (4,867) | \u00a0 | (4,844) | |||
Income (loss) from operations | $ | 938 | $ | (512) | $ | 4,779 | $ | (969) |
The following table presents our long-lived assets, corresponding to our geographic areas are as follows (in thousands):
March\u00a031,\u00a0 | June\u00a030,\u00a0 | |||||
\u00a0\u00a0\u00a0\u00a0 | 2024 | \u00a0\u00a0\u00a0\u00a0 | 2023 | |||
Long-lived assets: | ||||||
North America | $ | 244 | $ | 358 | ||
Europe, Middle East, & Africa | \u00a0 | 97 | \u00a0 | 131 | ||
Asia Pacific | \u00a0 | 142 | \u00a0 | 144 | ||
Long-lived assets | $ | 483 | $ | 633 |
For the purposes of entity-wide geographic area disclosures, long-lived assets consist of computers and equipment, furniture and fixtures, and leasehold improvements, net of accumulated depreciation and amortization. These items are included in property and equipment, net, on the accompanying Company\u2019s condensed consolidated balance sheets.
"}]},{"name":"rpt:f-428","factDimensions":{"xbrl:concept":"us-gaap:NumberOfOperatingSegments","xbrl:period":"2022-07-01T00:00:00/2023-04-01T00:00:00","xbrl:entity":"cik:0001066194","xbrl:unit":"egan:segment"},"factValues":[{"value":"1"}]},{"name":"rpt:f-429","factDimensions":{"xbrl:concept":"us-gaap:NumberOfOperatingSegments","xbrl:period":"2023-01-01T00:00:00/2023-04-01T00:00:00","xbrl:entity":"cik:0001066194","xbrl:unit":"egan:segment"},"factValues":[{"value":"1"}]},{"name":"rpt:f-430","factDimensions":{"xbrl:concept":"us-gaap:NumberOfOperatingSegments","xbrl:period":"2023-07-01T00:00:00/2024-04-01T00:00:00","xbrl:entity":"cik:0001066194","xbrl:unit":"egan:segment"},"factValues":[{"value":"1"}]},{"name":"rpt:f-431","factDimensions":{"xbrl:concept":"us-gaap:NumberOfOperatingSegments","xbrl:period":"2024-01-01T00:00:00/2024-04-01T00:00:00","xbrl:entity":"cik:0001066194","xbrl:unit":"egan:segment"},"factValues":[{"value":"1"}]},{"name":"rpt:f-432","factDimensions":{"xbrl:concept":"egan:IncomeFromOperationsByGeographicAreasTableTextBlock","xbrl:period":"2023-07-01T00:00:00/2024-04-01T00:00:00","xbrl:entity":"cik:0001066194"},"factValues":[{"value":"The following table presents our income (loss) from operations among our three operating regions (in thousands):
Three Months Ended | Nine Months Ended | ||||||||||
March\u00a031,\u00a0 | March\u00a031,\u00a0 | ||||||||||
2024 | \u00a0\u00a0\u00a0\u00a0 | 2023 | 2024 | \u00a0\u00a0\u00a0\u00a0 | 2023 | ||||||
Income (loss) from operations: | |||||||||||
North America | $ | 1,085 | $ | (297) | $ | 5,039 | $ | (917) | |||
Europe, Middle East, & Africa | \u00a0 | 1,416 | \u00a0 | 1,256 | \u00a0 | 4,607 | \u00a0 | 4,792 | |||
Asia Pacific | \u00a0 | (1,563) | \u00a0 | (1,471) | \u00a0 | (4,867) | \u00a0 | (4,844) | |||
Income (loss) from operations | $ | 938 | $ | (512) | $ | 4,779 | $ | (969) |
The following table presents our long-lived assets, corresponding to our geographic areas are as follows (in thousands):
March\u00a031,\u00a0 | June\u00a030,\u00a0 | |||||
\u00a0\u00a0\u00a0\u00a0 | 2024 | \u00a0\u00a0\u00a0\u00a0 | 2023 | |||
Long-lived assets: | ||||||
North America | $ | 244 | $ | 358 | ||
Europe, Middle East, & Africa | \u00a0 | 97 | \u00a0 | 131 | ||
Asia Pacific | \u00a0 | 142 | \u00a0 | 144 | ||
Long-lived assets | $ | 483 | $ | 633 |
Concentration of Credit Risk and Significant Customers
Our financial instruments that are exposed to concentrations of credit risk include cash and cash equivalents, restricted cash, and accounts receivable. We complement direct sales with resell partnerships based on product connectors into cloud contact center platforms. We also partner with system integrators and managed service providers. Two customers, who are also partners, accounted for more than 10% of total revenue during the three and nine months ended March 31, 2024. One of such partners accounted for more than 10% of total revenue during the three and nine months ended March 31, 2023. Two customers accounted for more than 10% of our gross accounts receivable balance as of March 31, 2024.
"}]},{"name":"rpt:f-463","factDimensions":{"xbrl:concept":"egan:NumberOfCustomersAndPartnersThatAccountedForMoreThanTenPercentageOfRevenue","xbrl:period":"2023-07-01T00:00:00/2024-04-01T00:00:00","xbrl:entity":"cik:0001066194","xbrl:unit":"egan:customer"},"factValues":[{"value":"2"}]},{"name":"rpt:f-464","factDimensions":{"xbrl:concept":"egan:NumberOfCustomersAndPartnersThatAccountedForMoreThanTenPercentageOfRevenue","xbrl:period":"2024-01-01T00:00:00/2024-04-01T00:00:00","xbrl:entity":"cik:0001066194","xbrl:unit":"egan:customer"},"factValues":[{"value":"2"}]},{"name":"rpt:f-465","factDimensions":{"xbrl:concept":"egan:NumberOfPartnersAccountedForMoreThanTenPercentageOfRevenue","xbrl:period":"2022-07-01T00:00:00/2023-04-01T00:00:00","xbrl:entity":"cik:0001066194","xbrl:unit":"egan:item"},"factValues":[{"value":"1"}]},{"name":"rpt:f-466","factDimensions":{"xbrl:concept":"egan:NumberOfPartnersAccountedForMoreThanTenPercentageOfRevenue","xbrl:period":"2023-01-01T00:00:00/2023-04-01T00:00:00","xbrl:entity":"cik:0001066194","xbrl:unit":"egan:item"},"factValues":[{"value":"1"}]},{"name":"rpt:f-467","factDimensions":{"xbrl:concept":"egan:NumberOfCustomersThatAccountedForMoreThanTenPercentOfCompanysAccountsReceivable","xbrl:period":"2024-04-01T00:00:00","xbrl:entity":"cik:0001066194","xbrl:unit":"egan:customer"},"factValues":[{"value":"2"}]},{"name":"rpt:f-468","factDimensions":{"xbrl:concept":"us-gaap:TradeAndOtherAccountsReceivablePolicy","xbrl:period":"2023-07-01T00:00:00/2024-04-01T00:00:00","xbrl:entity":"cik:0001066194"},"factValues":[{"value":"Accounts Receivable and Provision for Credit Losses
We extend unsecured credit to our customers on a regular basis. Our accounts receivable are 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. We write off a receivable after collection efforts have been exhausted and the amount is deemed uncollectible. Recovered written off receivables are recorded as they occur.
In certain revenue contracts, contractual billings do not coincide with revenue recognized on the contract. Unbilled accounts receivables (contract assets) are recorded when revenue recognized on the contract exceeds billings, pursuant to contract provisions, and become billable upon certain criteria being met. Unbilled accounts receivables, for which the Company has the unconditional right to consideration, totaled $1.3 million and $1.7 million as of March 31, 2024 and June 30, 2023, respectively, and are included in the accounts receivable, less provision for credit losses, balance on the accompanying condensed consolidated balance sheets.
As of fiscal year 2024, we adopted ASU 2016-13 - Measurement of Credit Losses on Financial Instruments with no material impact on our condensed consolidated financial statements.
"}]},{"name":"rpt:f-469","factDimensions":{"xbrl:concept":"us-gaap:UnbilledContractsReceivable","xbrl:period":"2024-04-01T00:00:00","xbrl:entity":"cik:0001066194","xbrl:unit":"iso4217:USD","us-gaap:BalanceSheetLocationAxis":"us-gaap:AccountsReceivableMember"},"factValues":[{"value":"1300000","decimals":-5}]},{"name":"rpt:f-470","factDimensions":{"xbrl:concept":"us-gaap:UnbilledContractsReceivable","xbrl:period":"2023-07-01T00:00:00","xbrl:entity":"cik:0001066194","xbrl:unit":"iso4217:USD","us-gaap:BalanceSheetLocationAxis":"us-gaap:AccountsReceivableMember"},"factValues":[{"value":"1700000","decimals":-5}]},{"name":"rpt:f-471","factDimensions":{"xbrl:concept":"us-gaap:CompensationRelatedCostsPolicyTextBlock","xbrl:period":"2023-07-01T00:00:00/2024-04-01T00:00:00","xbrl:entity":"cik:0001066194"},"factValues":[{"value":"Stock-Based Compensation
We account for stock-based compensation in accordance with ASC 718, Compensation\u2014Stock 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 expense over the vesting period, net of expected forfeitures. Stock-based compensation expense consists of expenses for stock options, restricted stock units (RSUs), and discounted employee common stock granted under our Amended and Restated 2005 Management Stock Option Plan, our Amended and Restated 2005 Stock Incentive Plan, and our 2017 Employee Stock Purchase Plan (ESPP).
The ESPP provides that eligible employees may purchase the Company\u2019s common stock through payroll deductions at a price equal to 85% of the lower of the fair market value at the entry date of the applicable offering period or at the end of each applicable purchasing period. The offering period, meaning a period with respect to which the right to purchase shares of our common stock may be granted under the ESPP, will not exceed twenty-seven months and consist of a series of six-month purchase periods. Eligible employees may join the ESPP at the beginning of any six-month purchase period. Under the terms of the ESPP, employees can choose to have between 1% and 15% of their base earnings withheld to purchase the Company\u2019s common stock. \u00a0
Determining the fair value of the stock-based awards at the grant date requires significant judgment and the use of estimates, particularly surrounding Black-Scholes valuation assumptions such as stock price volatility and expected option term.
Below is a summary of stock-based compensation included in the costs and expenses (in thousands):
Three Months Ended | Nine Months Ended | |||||||||||
March\u00a031,\u00a0 | March\u00a031,\u00a0 | |||||||||||
\u00a0\u00a0\u00a0\u00a0 | 2024 | \u00a0\u00a0\u00a0\u00a0 | 2023 | 2024 | \u00a0\u00a0\u00a0\u00a0 | 2023 | ||||||
Stock-based compensation expense: |
|
| ||||||||||
Cost of revenue | $ | 343 |
| $ | 371 | $ | 924 |
| $ | 1,213 | ||
Research and development | \u00a0 | 331 |
| \u00a0 | 509 | \u00a0 | 1,095 |
| \u00a0 | 1,633 | ||
Sales and marketing | \u00a0 | 120 |
| \u00a0 | 174 | \u00a0 | 476 |
| \u00a0 | 997 | ||
General and administrative | \u00a0 | 316 |
| \u00a0 | 393 | \u00a0 | 1,018 |
| \u00a0 | 1,440 | ||
Total stock-based compensation expense | $ | 1,110 |
| $ | 1,447 | $ | 3,513 |
| $ | 5,283 |
Total stock-based compensation includes expense related to non-employee awards of $26,000 and $77,000 during the three and nine months ended March 31, 2024, respectively.
Total stock-based compensation includes expense related to non-employee awards of $31,000 and $113,000 during the three and nine months ended March 31, 2023, respectively.
Total stock-based compensation includes expense related to the ESPP of $102,000 and $268,000 for the three and nine months ended March 31, 2024, respectively. Total stock-based compensation includes expense related to the ESPP of $115,000 and $305,000 for the three and nine months ended March 31, 2023, respectively.
We utilize the Black-Scholes valuation model for estimating the fair value of the stock-based compensation of options granted and ESPP stock purchase rights. All shares of our common stock issued pursuant to our stock option, RSUs, and ESPP plans are only issued out of an authorized reserve of shares of common stock which were previously registered with the SEC on Registration Statements on Form S-8.
During the three months ended March 31, 2024 and 2023, we granted options to purchase 9,600 and 22,300 shares of common stock with a weighted-average fair value of $3.17 and $4.66 per share, respectively.
During the nine months ended March 31, 2024 and 2023, we granted options to purchase 60,000 and 176,367 shares of common stock with a weighted-average fair value of $3.27 and $4.77 per share, respectively.
We used the following weighted-average assumptions as inputs into the Black-Scholes valuation model to estimate the fair value of the options granted:
Three Months Ended | Nine Months Ended | |||||||||
March\u00a031,\u00a0 | March\u00a031,\u00a0 | |||||||||
\u00a0\u00a0\u00a0\u00a0 | 2024 | \u00a0\u00a0\u00a0\u00a0 | 2023 | 2024 | \u00a0\u00a0\u00a0\u00a0 | 2023 | \u00a0 | |||
Expected volatility | 55 | %\u00a0\u00a0 | 63 | %\u00a0\u00a0 | 54 | %\u00a0\u00a0 | 64 | % | ||
Average risk-free interest rate | 4.12 | %\u00a0\u00a0 | 3.80 | %\u00a0\u00a0 | 4.32 | %\u00a0\u00a0 | 3.53 | % | ||
Expected life (in years) | 4.56 | 4.94 | 4.55 |
| 4.65 |
| ||||
Dividend yield | \u2014 |
| \u2014 |
| \u2014 |
| \u2014 |
|
The dividend yield of zero is based on the fact that we have never paid cash dividends and have no present intention to pay cash dividends. We determined the appropriate measure of expected volatility by reviewing historic volatility in the share price of our common stock, as adjusted for certain events that management deemed to be non-recurring and non-indicative of future events. The risk-free interest rate is derived from the average U.S. Treasury Strips rate with maturities approximating the expected lives of the awards during the period, which approximate the rate in effect at the time of the grant.
On December 1, 2023, employees were granted the right to purchase an aggregate of 87,332 shares under the ESPP, and compensation expense related to those purchase rights for the three and nine months ended March 31, 2024 was $102,000 and $136,000, respectively.
On December 1, 2022, employees were granted the right to purchase an aggregate of 88,414 shares under the ESPP, and compensation expense related to those purchase rights for the three and nine months ended March 31, 2023 was $115,000 and $156,000, respectively.
As of March 31, 2024, there were 868,129 shares of common stock available for issuance under the ESPP. \u00a0
We base our estimate of expected life of a stock option on the historical exercise behavior and cancellations of all past option grants made by the Company during the time period which its equity shares have been publicly traded, the contractual term of the option, the vesting period and the expected remaining term of the outstanding options.
In accordance with ASU 2016-09, Compensation\u2014Stock Compensation: Improvements to Employee Share-Based Accounting, we elected to continue to estimate forfeitures in the calculation of stock-based compensation expense.
As of March 31, 2024, there was approximately $1.9 million of total unrecognized compensation cost, net of expected forfeitures, related to unvested stock options, which is expected to be recognized over the weighted-average period of 0.9 years. There were 60,992 and 35,850 options exercised during the three months ended March 31, 2024 and 2023, respectively. There were 184,492 and 165,011 options exercised during the nine months ended March 31, 2024 and 2023, respectively.
As of March 31, 2024, there was approximately $888,000 of total unrecognized compensation cost, net of expected forfeitures, related to unvested RSUs, which is expected to be recognized over the weighted-average period of 0.6 years. There were no RSUs granted during the three months ended March 31, 2024. There were 200,821 RSUs granted during the nine months ended March 31, 2024, with a weighted average grant date fair value of $7.55 per share. No RSUs were granted during the three and nine months ended March 31, 2023.
"}]},{"name":"rpt:f-472","factDimensions":{"xbrl:concept":"egan:EmployeeStockPurchasePlanPercentageOfStockPriceAtWhichStockMayBePurchased","xbrl:period":"2023-07-01T00:00:00/2024-04-01T00:00:00","xbrl:entity":"cik:0001066194","us-gaap:AwardTypeAxis":"us-gaap:EmployeeStockMember"},"factValues":[{"value":"0.85"}]},{"name":"rpt:f-473","factDimensions":{"xbrl:concept":"egan:EmployeeStockPurchasePlanOfferingPeriod","xbrl:period":"2023-07-01T00:00:00/2024-04-01T00:00:00","xbrl:entity":"cik:0001066194","srt:RangeAxis":"srt:MaximumMember","us-gaap:AwardTypeAxis":"us-gaap:EmployeeStockMember"},"factValues":[{"value":"P27M"}]},{"name":"rpt:f-474","factDimensions":{"xbrl:concept":"egan:EmployeeStockPurchasePlanPurchasePeriod","xbrl:period":"2023-07-01T00:00:00/2024-04-01T00:00:00","xbrl:entity":"cik:0001066194","us-gaap:AwardTypeAxis":"us-gaap:EmployeeStockMember"},"factValues":[{"value":"P6M"}]},{"name":"rpt:f-475","factDimensions":{"xbrl:concept":"egan:EmployeeStockPurchasePlanEmployeePayrollContributionLimitPercentage","xbrl:period":"2023-07-01T00:00:00/2024-04-01T00:00:00","xbrl:entity":"cik:0001066194","srt:RangeAxis":"srt:MinimumMember","us-gaap:AwardTypeAxis":"us-gaap:EmployeeStockMember"},"factValues":[{"value":"0.01"}]},{"name":"rpt:f-476","factDimensions":{"xbrl:concept":"egan:EmployeeStockPurchasePlanEmployeePayrollContributionLimitPercentage","xbrl:period":"2023-07-01T00:00:00/2024-04-01T00:00:00","xbrl:entity":"cik:0001066194","srt:RangeAxis":"srt:MaximumMember","us-gaap:AwardTypeAxis":"us-gaap:EmployeeStockMember"},"factValues":[{"value":"0.15"}]},{"name":"rpt:f-477","factDimensions":{"xbrl:concept":"us-gaap:ScheduleOfEmployeeServiceShareBasedCompensationAllocationOfRecognizedPeriodCostsTextBlock","xbrl:period":"2023-07-01T00:00:00/2024-04-01T00:00:00","xbrl:entity":"cik:0001066194"},"factValues":[{"value":"Below is a summary of stock-based compensation included in the costs and expenses (in thousands):
Three Months Ended | Nine Months Ended | |||||||||||
March\u00a031,\u00a0 | March\u00a031,\u00a0 | |||||||||||
\u00a0\u00a0\u00a0\u00a0 | 2024 | \u00a0\u00a0\u00a0\u00a0 | 2023 | 2024 | \u00a0\u00a0\u00a0\u00a0 | 2023 | ||||||
Stock-based compensation expense: |
|
| ||||||||||
Cost of revenue | $ | 343 |
| $ | 371 | $ | 924 |
| $ | 1,213 | ||
Research and development | \u00a0 | 331 |
| \u00a0 | 509 | \u00a0 | 1,095 |
| \u00a0 | 1,633 | ||
Sales and marketing | \u00a0 | 120 |
| \u00a0 | 174 | \u00a0 | 476 |
| \u00a0 | 997 | ||
General and administrative | \u00a0 | 316 |
| \u00a0 | 393 | \u00a0 | 1,018 |
| \u00a0 | 1,440 | ||
Total stock-based compensation expense | $ | 1,110 |
| $ | 1,447 | $ | 3,513 |
| $ | 5,283 |
Three Months Ended | Nine Months Ended | |||||||||
March\u00a031,\u00a0 | March\u00a031,\u00a0 | |||||||||
\u00a0\u00a0\u00a0\u00a0 | 2024 | \u00a0\u00a0\u00a0\u00a0 | 2023 | 2024 | \u00a0\u00a0\u00a0\u00a0 | 2023 | \u00a0 | |||
Expected volatility | 55 | %\u00a0\u00a0 | 63 | %\u00a0\u00a0 | 54 | %\u00a0\u00a0 | 64 | % | ||
Average risk-free interest rate | 4.12 | %\u00a0\u00a0 | 3.80 | %\u00a0\u00a0 | 4.32 | %\u00a0\u00a0 | 3.53 | % | ||
Expected life (in years) | 4.56 | 4.94 | 4.55 |
| 4.65 |
| ||||
Dividend yield | \u2014 |
| \u2014 |
| \u2014 |
| \u2014 |
|
Leases
Lease agreements are evaluated to determine whether an arrangement is or contains a lease in accordance with ASC 842, Leases.
Operating leases are included in operating lease right-of-use (ROU) assets, current operating lease liabilities, and noncurrent operating lease liabilities in the condensed consolidated financial statements. ROU assets represent the Company\u2019s right to use leased assets over the agreed upon term. Lease liabilities represent the Company\u2019s contractual obligation to make lease payments over the lease term.
For operating leases, ROU assets and lease liabilities are recognized at the commencement date of the lease. The lease liability is measured as the present value of the lease payments over the lease term, using the rate implicit in the lease if readily determinable. If the rate implicit in the lease cannot be readily determined, the Company uses its incremental borrowing rate at lease commencement. The operating lease ROU assets are calculated as the present value of the remaining lease payments plus unamortized initial direct costs and any prepayments, less unamortized lease incentives received.
Operating leases typically include non-lease components such as common-area maintenance costs. We have elected to include non-lease components with lease payments for the purpose of calculating lease ROU assets and liabilities, to the extent that they are fixed. Non-lease component payments that are not fixed are expensed as incurred as variable lease payments.
Lease terms may include renewal or extension options to the extent they are reasonably certain to be exercised. The assessment of whether renewal or extension options are reasonably certain to be exercised is made at lease commencement. Factors considered in determining whether an option is reasonably certain of exercise include, but are not limited to, the value of any leasehold improvements, the value of renewal rates compared to market rates, and the presence of factors that would cause a significant economic penalty to the Company if the option were not exercised. Lease expense is recognized on a straight-line basis over the lease term. The Company has elected not to recognize ROU assets and obligations for leases with an initial term of twelve months or less, and has applied a capitalization threshold to recognize a lease on the condensed consolidated balance sheet. The expense associated with short-term leases and leases that do not meet the Company\u2019s capitalization threshold are recorded to lease expense in the period it is incurred. \u00a0
"}]},{"name":"rpt:f-553","factDimensions":{"xbrl:concept":"us-gaap:GoodwillAndIntangibleAssetsGoodwillPolicy","xbrl:period":"2023-07-01T00:00:00/2024-04-01T00:00:00","xbrl:entity":"cik:0001066194"},"factValues":[{"value":"
Goodwill
We review goodwill annually for impairment or sooner whenever events or changes in circumstances indicate that it may be impaired. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit. We operate under a single reporting unit and accordingly, all of our goodwill is associated with the entire company. We had no indicators of impairment during the three and nine months ended March 31, 2024.
"}]},{"name":"rpt:f-554","factDimensions":{"xbrl:concept":"us-gaap:GoodwillImpairmentLoss","xbrl:period":"2023-07-01T00:00:00/2024-04-01T00:00:00","xbrl:entity":"cik:0001066194","xbrl:unit":"iso4217:USD"},"factValues":[{"value":"0","decimals":-3}]},{"name":"rpt:f-555","factDimensions":{"xbrl:concept":"us-gaap:GoodwillImpairmentLoss","xbrl:period":"2024-01-01T00:00:00/2024-04-01T00:00:00","xbrl:entity":"cik:0001066194","xbrl:unit":"iso4217:USD"},"factValues":[{"value":"0","decimals":-3}]},{"name":"rpt:f-556","factDimensions":{"xbrl:concept":"us-gaap:RevenueFromContractWithCustomerTextBlock","xbrl:period":"2023-07-01T00:00:00/2024-04-01T00:00:00","xbrl:entity":"cik:0001066194"},"factValues":[{"value":"2. REVENUE RECOGNITION
Disaggregation of Revenue
The following table presents our subscription and professional services revenue during the three and nine months ended March 31, 2024 and 2023, respectively (in thousands):
Three Months Ended | Nine Months Ended | ||||||||||
March\u00a031,\u00a0 | March\u00a031,\u00a0 | ||||||||||
2024 | \u00a0\u00a0\u00a0\u00a0 | 2023 | 2024 | \u00a0\u00a0\u00a0\u00a0 | 2023 | ||||||
Revenue: |
|
| |||||||||
SaaS revenue | $ | 20,277 | $ | 20,854 | $ | 64,480 | $ | 66,911 | |||
Legacy revenue | 47 | 126 | 163 | 606 | |||||||
Total subscription revenue | 20,324 |
| 20,980 | 64,643 |
| 67,517 | |||||
Professional services revenue | \u00a0 | 2,026 |
| \u00a0 | 2,033 | \u00a0 | 5,698 |
| \u00a0 | 5,859 | |
Total revenue | $ | 22,350 |
| $ | 23,013 | $ | 70,341 |
| $ | 73,376 |
The following table presents our revenue recognized over-time and at a point-in-time during the three and nine months ended March 31, 2024 and 2023, respectively (in thousands):
Three Months Ended | Nine Months Ended | ||||||||||
March\u00a031,\u00a0 | March\u00a031,\u00a0 | ||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||
Revenue: | |||||||||||
Over-time | $ | 20,141 | $ | 20,650 | $ | 62,582 | $ | 64,773 | |||
Point-in-time | 2,209 | 2,363 | 7,759 | 8,603 | |||||||
Total revenue | $ | 22,350 | $ | 23,013 | $ | 70,341 | $ | 73,376 |
The following table presents our revenue by geography. Revenue by geography is generally determined on the region of our contracting entity rather than the region of our customer. The relative proportion of our total revenue between each geographic region as presented in the table below was materially consistent across each of our operating regions\u2019 revenue for the periods presented (in thousands):
Three Months Ended | Nine Months Ended | ||||||||||
March\u00a031,\u00a0 | March\u00a031,\u00a0 | ||||||||||
2024 | \u00a0\u00a0\u00a0\u00a0 | 2023 | 2024 | \u00a0\u00a0\u00a0\u00a0 | 2023 | ||||||
Revenue: | |||||||||||
North America | $ | 17,417 | $ | 17,856 | $ | 55,242 | $ | 56,778 | |||
Europe, Middle East, & Africa | 4,933 | \u00a0 | 5,157 | \u00a0 | 15,099 | \u00a0 | 16,598 | ||||
Total revenue | $ | 22,350 | $ | 23,013 | $ | 70,341 | $ | 73,376 |
Contract Balances
Contract assets, if any, consist of unbilled receivables for completed performance obligations which have not been invoiced, and for which we do not have an unconditional right to consideration. Unbilled receivables are included in accounts receivable, less provision for credit losses on our condensed consolidated balance sheets. Contract liabilities consist of deferred revenue for which we have an obligation to transfer services to customers and have received consideration in advance or the amount is due from customers. Once the obligations are fulfilled, then deferred revenue is recognized to revenue in the respective period.
The following table presents our contract liabilities (in thousands):
\u00a0\u00a0\u00a0\u00a0 | March 31, 2024 | June 30, 2023 | ||||
Contract liabilities: | ||||||
Deferred revenue | $ | 34,342 | $ | 47,762 | ||
Deferred revenue, net of current portion | 3,157 | \u00a0 | 2,101 | |||
Total deferred revenue | $ | 37,499 | $ | 49,863 |
$8.2 million and $31.6 million of deferred revenue as of June 30, 2023 was recognized to revenue during the three and nine months ended March 31, 2024, respectively.
Remaining Performance Obligations
Remaining performance obligations represent contracted revenue that had not yet been recognized, and include deferred revenue, invoices that have been issued to customers but were uncollected and have not been recognized as revenue, and 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 March 31, 2024, our remaining performance obligations were $67.7 million of which we expect to recognize $47.9 million and $19.8 million as revenue within one year and beyond one year, respectively.
"}]},{"name":"rpt:f-557","factDimensions":{"xbrl:concept":"us-gaap:DisaggregationOfRevenueTableTextBlock","xbrl:period":"2023-07-01T00:00:00/2024-04-01T00:00:00","xbrl:entity":"cik:0001066194"},"factValues":[{"value":"The following table presents our subscription and professional services revenue during the three and nine months ended March 31, 2024 and 2023, respectively (in thousands):
Three Months Ended | Nine Months Ended | ||||||||||
March\u00a031,\u00a0 | March\u00a031,\u00a0 | ||||||||||
2024 | \u00a0\u00a0\u00a0\u00a0 | 2023 | 2024 | \u00a0\u00a0\u00a0\u00a0 | 2023 | ||||||
Revenue: |
|
| |||||||||
SaaS revenue | $ | 20,277 | $ | 20,854 | $ | 64,480 | $ | 66,911 | |||
Legacy revenue | 47 | 126 | 163 | 606 | |||||||
Total subscription revenue | 20,324 |
| 20,980 | 64,643 |
| 67,517 | |||||
Professional services revenue | \u00a0 | 2,026 |
| \u00a0 | 2,033 | \u00a0 | 5,698 |
| \u00a0 | 5,859 | |
Total revenue | $ | 22,350 |
| $ | 23,013 | $ | 70,341 |
| $ | 73,376 |
The following table presents our revenue recognized over-time and at a point-in-time during the three and nine months ended March 31, 2024 and 2023, respectively (in thousands):
Three Months Ended | Nine Months Ended | ||||||||||
March\u00a031,\u00a0 | March\u00a031,\u00a0 | ||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||
Revenue: | |||||||||||
Over-time | $ | 20,141 | $ | 20,650 | $ | 62,582 | $ | 64,773 | |||
Point-in-time | 2,209 | 2,363 | 7,759 | 8,603 | |||||||
Total revenue | $ | 22,350 | $ | 23,013 | $ | 70,341 | $ | 73,376 |
Three Months Ended | Nine Months Ended | ||||||||||
March\u00a031,\u00a0 | March\u00a031,\u00a0 | ||||||||||
2024 | \u00a0\u00a0\u00a0\u00a0 | 2023 | 2024 | \u00a0\u00a0\u00a0\u00a0 | 2023 | ||||||
Revenue: | |||||||||||
North America | $ | 17,417 | $ | 17,856 | $ | 55,242 | $ | 56,778 | |||
Europe, Middle East, & Africa | 4,933 | \u00a0 | 5,157 | \u00a0 | 15,099 | \u00a0 | 16,598 | ||||
Total revenue | $ | 22,350 | $ | 23,013 | $ | 70,341 | $ | 73,376 |
The following table presents our contract liabilities (in thousands):
\u00a0\u00a0\u00a0\u00a0 | March 31, 2024 | June 30, 2023 | ||||
Contract liabilities: | ||||||
Deferred revenue | $ | 34,342 | $ | 47,762 | ||
Deferred revenue, net of current portion | 3,157 | \u00a0 | 2,101 | |||
Total deferred revenue | $ | 37,499 | $ | 49,863 |
3. EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share is computed using the weighted-average number of shares of common stock outstanding. In periods where net income is reported, the weighted-average number of shares is increased by stock options in the money and shares issuable for RSUs subject to service-based vesting requirements to calculate diluted earnings per share.
The following table represents the calculation of basic and diluted earnings (loss) per share (in thousands, except per share data):
Three Months Ended | Nine Months Ended | |||||||||||
March\u00a031,\u00a0 | March\u00a031,\u00a0 | |||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||
Net income (loss) | \u00a0\u00a0\u00a0\u00a0 | $ | 1,493 | \u00a0\u00a0\u00a0\u00a0 | $ | (372) | $ | 6,274 | \u00a0\u00a0\u00a0\u00a0 | $ | (492) | |
Per share information: | ||||||||||||
Earnings (loss) per share: | ||||||||||||
Basic | $ | 0.05 | $ | (0.01) | $ | 0.20 | $ | (0.02) | ||||
Diluted | $ | 0.05 | $ | (0.01) | $ | 0.20 | $ | (0.02) | ||||
Weighted-average shares used in computation: | ||||||||||||
Basic | \u00a0 | 30,976 |
| \u00a0 | 32,122 | \u00a0 | 31,212 |
| \u00a0 | 32,024 | ||
Effect of dilutive options and RSUs | 623 | \u2014 | 646 | \u2014 | ||||||||
Diluted | \u00a0 | 31,599 |
| \u00a0 | 32,122 | \u00a0 | 31,858 |
| \u00a0 | 32,024 |
Weighted-average shares of stock options to purchase 3,458,040 and 3,493,090 shares of common stock for the three months ended March 31, 2024 and 2023, respectively, and weighted-average shares of stock options to purchase 3,504,202 and 3,604,297 shares of common stock for the nine months ended March 31, 2024 and 2023, respectively, were not included in the computation of diluted earnings (loss) per share due to their anti-dilutive effect. Such securities could have a dilutive effect in future periods.
"}]},{"name":"rpt:f-617","factDimensions":{"xbrl:concept":"us-gaap:ScheduleOfEarningsPerShareBasicAndDilutedTableTextBlock","xbrl:period":"2023-07-01T00:00:00/2024-04-01T00:00:00","xbrl:entity":"cik:0001066194"},"factValues":[{"value":"The following table represents the calculation of basic and diluted earnings (loss) per share (in thousands, except per share data):
Three Months Ended | Nine Months Ended | |||||||||||
March\u00a031,\u00a0 | March\u00a031,\u00a0 | |||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||
Net income (loss) | \u00a0\u00a0\u00a0\u00a0 | $ | 1,493 | \u00a0\u00a0\u00a0\u00a0 | $ | (372) | $ | 6,274 | \u00a0\u00a0\u00a0\u00a0 | $ | (492) | |
Per share information: | ||||||||||||
Earnings (loss) per share: | ||||||||||||
Basic | $ | 0.05 | $ | (0.01) | $ | 0.20 | $ | (0.02) | ||||
Diluted | $ | 0.05 | $ | (0.01) | $ | 0.20 | $ | (0.02) | ||||
Weighted-average shares used in computation: | ||||||||||||
Basic | \u00a0 | 30,976 |
| \u00a0 | 32,122 | \u00a0 | 31,212 |
| \u00a0 | 32,024 | ||
Effect of dilutive options and RSUs | 623 | \u2014 | 646 | \u2014 | ||||||||
Diluted | \u00a0 | 31,599 |
| \u00a0 | 32,122 | \u00a0 | 31,858 |
| \u00a0 | 32,024 |
4. INCOME TAXES
Income taxes are accounted for using the asset and liability method in accordance with ASC 740, Income Taxes (ASC 740). Under this method, deferred tax liabilities and assets are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. For the legacy eGain business in the United States, based upon the weight of available evidence, which includes our historical operating performance, our future investment plans, and the uncertainty in the current market environment and economic uncertainty, we have provided a full valuation allowance against our net deferred tax assets. For the legacy eGain business in the United Kingdom, based on the positive evidence, the Company has determined it would be able to utilize the deferred tax assets and does not have a valuation allowance against the deferred tax assets. The remaining eGain foreign operations as well as Exony\u2019s business have historically been profitable and we believe it is more likely than not that those assets will be realized. Our tax provision primarily relates to foreign activities as well as state income taxes. Our income tax rate differs from the statutory tax rates primarily due to the change in our valuation allowance as well as our foreign operations.
We account for uncertain tax positions according to the provisions of ASC 740. ASC 740 contains a two-step approach for recognizing and measuring uncertain tax positions. Tax positions are evaluated for recognition by determining if the weight of available evidence indicates that it is probable that the position will be sustained on audit, including resolution of related appeals or litigation. Tax benefits are then measured as the largest amount which is more than 50% likely of being realized upon ultimate settlement. We consider many factors when evaluating and estimating tax positions and tax benefits, which may require periodic adjustments and which may not accurately anticipate actual outcomes.
As of March 31, 2024, utilization of the net operating loss (NOL) or tax credit carryforwards to offset future taxable income and taxes, respectively, are subject to an annual limitation under the Internal Revenue Code of 1986 and similar state provisions, which is determined by first multiplying the value of the Company\u2019s stock at the time of the ownership change by the applicable long-term, tax-exempt rate, and then could be subject to additional adjustments such as built in gain or built in loss, as required. Any limitation may result in expiration of all or a portion of its NOL and or tax credit carryforwards before utilization.
Under the Tax Cuts and Jobs Act, enacted on December 22, 2017 (TCJA), federal NOLs incurred in 2018 and in future years may be carried forward indefinitely, but generally may not be carried back, and the deductibility of such NOLs is limited to 80% of taxable income.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), P.L. 116-136, was passed into law, amending portions of certain relevant US tax laws. The CARES Act included a number of federal income tax law changes, including, but not limited to: (i) permitting NOL carrybacks to offset 100% of taxable income for taxable years beginning before 2021, (ii) accelerating alternative minimum tax credit refunds, (iii) temporarily increasing the allowable business interest deduction from 30% to 50% of adjusted taxable income, and (iv) providing a technical correction for depreciation related to qualified improvement property. The CARES Act had no impact on our consolidated financial statements. Beginning in 2022, the TCJA eliminates the option to immediately deduct research and development expenditures and requires taxpayers to capitalize and amortize domestic expenditures over five years and foreign expenditures over 15 years. While the mandatory capitalization requirement increases our deferred tax assets and cash tax liabilities for 2022, the tax year in which the provision took effect, the impact will decline annually over the five-year amortization period to an immaterial amount in year six.
On August 16, 2022, the Inflation Reduction Act of 2022 (IRA) was signed into law and is effective for taxable years beginning after December 31, 2022. The IRA includes multiple incentives to promote clean energy with tax provisions primarily focused on implementing a 15% minimum tax on global adjusted financial statement income and a 1% excise tax on share repurchases. These measures may affect our condensed consolidated financial statements and we will continue to evaluate the applicability and effect of the IRA as more guidance is issued.
"}]},{"name":"rpt:f-645","factDimensions":{"xbrl:concept":"us-gaap:LesseeOperatingLeasesTextBlock","xbrl:period":"2023-07-01T00:00:00/2024-04-01T00:00:00","xbrl:entity":"cik:0001066194"},"factValues":[{"value":"5. LEASES
We lease our office facilities under non-cancelable operating leases that expire on various dates through fiscal year 2033. We also modified three of our existing operating leases by extending the terms under such leases, which resulted in an increase in operating lease right-of-use assets and operating lease liabilities in the amount of approximately $2.1 million during the nine months ended March 31, 2024. All of our office leases are classified as operating leases with lease expense recognized on a straight-line basis over the lease term. Lease ROU assets and liabilities are recognized on the commencement date at the present value of lease payments over the lease term. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on information available at the commencement date to determine the present value of lease payments.
Total operating lease costs were $353,000 and $325,000 for the three months ended March 31, 2024 and 2023, respectively. Total operating lease costs were $1.0 million and $961,000 for the nine months ended March 31, 2024 and 2023, respectively.
For the three and nine months ended March 31, 2024, operating cash outflows for operating leases were $310,000 and $900,000, respectively. For the three and nine months ended March 31, 2023, operating cash outflows for operating leases were $307,000 and $900,000, respectively.
The following tables present information about leases on our condensed consolidated balance sheets (in thousands):
March\u00a031,\u00a0 | June\u00a030,\u00a0 | ||||||
2024 | 2023 | ||||||
Assets: | |||||||
Operating lease right-of-use assets | $ | 4,077 | $ | 2,797 | |||
Liabilities: | |||||||
Operating lease liabilities | 1,192 | 832 | |||||
Operating lease liabilities, net of current portion | 2,803 | 1,762 |
The following table presents information about the weighted average lease term and discount rate as follows:
March 31, 2024 | June 30, 2023 | |||||||
Weighted average remaining lease term (in years) | 5.34 | 3.40 | ||||||
Weighted average discount rate | 7.61 | % | 4.97 | % |
As of March 31, 2024, remaining maturities of lease liabilities are as follows (in thousands):
Fiscal Period: | |||
Remaining three months of fiscal 2024 | $ | 299 | |
Fiscal 2025 | 1,181 | ||
Fiscal 2026 | \u00a0 | 1,056 | |
Fiscal 2027 | \u00a0 | 805 | |
Fiscal 2028 | 278 | ||
Fiscal 2029 | 278 | ||
Fiscal 2030 and thereafter | 1,249 | ||
Total minimum lease payments | 5,146 | ||
Less: Imputed interest | (1,151) | ||
Total operating lease liabilities | 3,995 | ||
Less: Current operating lease liabilities | (1,192) | ||
Total operating lease liabilities, net of current portion | $ | 2,803 |
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The following tables present information about leases on our condensed consolidated balance sheets (in thousands):
March\u00a031,\u00a0 | June\u00a030,\u00a0 | ||||||
2024 | 2023 | ||||||
Assets: | |||||||
Operating lease right-of-use assets | $ | 4,077 | $ | 2,797 | |||
Liabilities: | |||||||
Operating lease liabilities | 1,192 | 832 | |||||
Operating lease liabilities, net of current portion | 2,803 | 1,762 |
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March 31, 2024 | June 30, 2023 | |||||||
Weighted average remaining lease term (in years) | 5.34 | 3.40 | ||||||
Weighted average discount rate | 7.61 | % | 4.97 | % |
Fiscal Period: | |||
Remaining three months of fiscal 2024 | $ | 299 | |
Fiscal 2025 | 1,181 | ||
Fiscal 2026 | \u00a0 | 1,056 | |
Fiscal 2027 | \u00a0 | 805 | |
Fiscal 2028 | 278 | ||
Fiscal 2029 | 278 | ||
Fiscal 2030 and thereafter | 1,249 | ||
Total minimum lease payments | 5,146 | ||
Less: Imputed interest | (1,151) | ||
Total operating lease liabilities | 3,995 | ||
Less: Current operating lease liabilities | (1,192) | ||
Total operating lease liabilities, net of current portion | $ | 2,803 |
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6. COMMITMENTS AND CONTINGENCIES
Litigation
In the ordinary course of business, we are involved in various legal proceedings and claims related to alleged infringement of intellectual property rights, commercial, corporate and securities, labor and employment, wage and hour, and other claims that are not expected to have a material impact on our business or our condensed consolidated financial statements. We have been, and may in the future be, put on notice and/or sued by third parties for alleged infringement of their proprietary rights, including patent infringement.
We evaluate all claims and lawsuits with respect to their potential merits, our potential defenses and counterclaims, settlement or litigation potential and the expected effect on us. Our technologies may be subject to injunction if they are found to infringe the rights of a third party. In addition, our agreements require us to indemnify our customers for third-party intellectual property infringement claims, which could increase the cost to us of an adverse ruling on such a claim.
Warranty
We generally warrant that the program portion of our software will perform substantially in accordance with certain specifications for a period up to one year from the date of delivery. Our liability for a breach of this warranty is either a return of the license fee or providing a fix, patch, work-around or replacement of the software.
We also provide standard warranties against and indemnification for the potential infringement of third party intellectual property rights to our customers relating to the use of our products, as well as indemnification agreements with certain officers and employees under which we may be required to indemnify such persons for liabilities arising out of their duties to us. The terms of such obligations vary. Generally, the maximum obligation is the amount permitted by law. Historically, cost related to these warranties have not been significant. However, we cannot guarantee that a warranty reserve will not become necessary in the future.
Indemnification
We have agreed to indemnify our directors and executive officers for costs associated with any fees, expenses, judgments, fines and settlement amounts incurred by any of these persons in any action or proceeding to which any of those persons is, or is threatened to be, made a party by reason of the person\u2019s service as a director or officer, including any action by us, arising out of that person\u2019s services as our director or officer or that person\u2019s services provided to any other company or enterprise at our request.
Transfer Pricing
We have received transfer-pricing assessments from tax authorities with regard to transfer pricing issues for certain fiscal years, which we have appealed with the appropriate authority. We review the status of each significant matter and assess its potential financial exposure. We believe that such assessments are without merit and would not have a significant impact on our consolidated financial statements.
Contractual Commitments
Our principal contractual commitments consist of obligations under leases for office space. Lease agreements are evaluated to determine whether an arrangement is or contains a lease in accordance with ASC 842, Leases.
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7. FAIR VALUE MEASUREMENT
ASC 820, Fair Value Measurement (ASC 820), defines fair value, establishes a framework for measuring fair value of assets and liabilities, and expands disclosures about fair value measurements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the assets or liabilities in an orderly transaction between market participants on the measurement date. Subsequent changes in fair value of these financial assets and liabilities are recognized in earnings or other comprehensive income when they occur. ASC 820 applies whenever other statements require or permit assets or liabilities to be measured at fair value.
ASC 820 includes a fair value hierarchy, of which the first two are considered observable and the last unobservable, that is intended to increase the consistency and comparability in fair value measurements and related disclosures. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity\u2019s pricing based upon their own market assumptions.
The fair value hierarchy consists of the following three levels:
Level\u00a01\u00a0\u2013\u00a0instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets.
Level\u00a02\u00a0\u2013\u00a0instrument valuations are obtained from readily-available pricing sources for comparable instruments.
Level\u00a03\u00a0\u2013\u00a0instrument valuations are obtained without observable market value and require a high level of judgment to determine the fair value.
Our money market funds are measured at fair value on a recurring basis based on quoted market prices in active markets and are classified as level 1 within the fair value hierarchy. As of March 31, 2024 and June 30, 2023, cash equivalents classified as level 1 instruments, including money market account investments, were measured at $72.2 million and $67.3 million, respectively.
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8. SHARE REPURCHASE PROGRAM
On November 14, 2022, the Company\u2019s Board of Directors authorized a stock repurchase program under which we may purchase up to $20.0 million of our outstanding common stock. As of March 31, 2024, approximately $5.7 million remained available for stock repurchases pursuant to our stock repurchase program.
Under the stock repurchase program, we may purchase shares of common stock on a discretionary basis from time to time through open market transactions or privately negotiated transactions at prices deemed appropriate by us. In addition, at our discretion, open market repurchase of common stock may also be made under a Rule 10b5-1 plan, which would permit common stock to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws or self-imposed trading restrictions.
The timing and number of shares repurchased will be determined based on an evaluation of market conditions and other factors, including stock price, trading volume, general business and market conditions, and the availability of capital. The original stock repurchase program is effective immediately as of November 14, 2022, and was amended to extend the term by an additional year until November 14, 2024, unless further extended, does not obligate us to acquire a specified number of shares and may be modified, suspended, or discontinued at any time at our discretion without notice. The stock repurchase program will be funded using existing cash or future cash flows. During the three months ended March 31, 2024, 880,569 shares have been repurchased for an average acquisition cost per share of $6.26, totaling $5.5 million. During the nine months ended March 31, 2024, 1,354,467 shares have been repurchased for an average acquisition cost per share of $6.30, totaling $8.5 million. We intend to reissue repurchased shares at a later date and therefore carry the shares as treasury stock at cost.
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Name | Title | Action | Adoption Date | Expiration Date | Aggregate # of Securities to be Purchased/Sold | |||||
Eric N. Smit (1) | Chief Financial Officer | Adoption | 3/8/2024 | 3/6/2026 | 81,461 |
(1) Eric N. Smit, Chief Financial Officer, adopted a Rule 10b5-1 trading plan on March 8, 2024. Mr. Smit's plan provides for the potential exercise of 80,000 vested stock options and 1,461 restricted stock units with the associated potential sale of up to 81,461 shares of the Company\u2019s common stock. The restricted stock units will vest on November 15, 2024, subject to continued service with the Company through such vesting date. The plan expires on March 6, 2026, or upon the earlier completion of all authorized transactions under the plan. This trading plan was entered into during an open window and is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Securities Exchange Act of 1934, as amended.
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