eGain Q2 Revenue Up 3%, AI ARR Soars 27% to $48.4M
eGain reported Q2 revenue of $23.0 million, up 3% year over year, while AI Knowledge Hub ARR climbed 27% to $48.4 million, representing 64% of total SaaS ARR. The company projected Q3 revenue of $22.2–$22.7 million and raised full-year revenue guidance to $90.5–$92.0 million.
1. Q2 2026 Financial Performance Exceeds Expectations
eGain reported Q2 revenue of $23.0 million, up 3% year-over-year, driven by subscription and services growth. GAAP net income rose to $2.3 million (basic EPS $0.09; diluted EPS $0.08) versus $671,000 (EPS $0.02) a year ago. On a non-GAAP basis, net income reached $3.0 million (EPS $0.11), more than double the $1.3 million (EPS $0.05) recorded in Q2 2025. Adjusted EBITDA climbed to $3.3 million, representing a 14% margin compared with 7% last year, reflecting continued operating leverage in its SaaS business.
2. AI Knowledge Hub Drives ARR Growth
Annual recurring revenue (ARR) for AI Knowledge Hub expanded 27% year-over-year to $48.4 million, now accounting for 64% of total SaaS ARR. CEO Ashu Roy highlighted key customer additions, including a major contract with European insurer Achmea to support 21,000 users across contact center and enterprise teams. This shift toward higher-value AI subscriptions underpins the company’s strategy to increase average contract value and reduce reliance on professional services.
3. Strong Cash Flow and Balance Sheet Position
Operating activities generated $10.1 million in cash, yielding a robust 44% operating cash flow margin in the quarter. eGain’s cash and cash equivalents on hand totaled $83.1 million, up from $70.5 million a year earlier, providing flexibility for R&D investments, potential acquisitions and share-based compensation obligations. The company also maintained a GAAP gross margin of 73% and non-GAAP gross margin of 74%, improvements of 300 and 300 basis points year-over-year, respectively.
4. Guidance Indicates Continued Momentum
For Q3 ending March 31, 2026, eGain forecasts revenue between $22.2 million and $22.7 million, non-GAAP net income of $1.8 million to $2.3 million (EPS $0.06–$0.08) and adjusted EBITDA of $2.6 million to $3.1 million (12–14% margin). Full-year revenue guidance is raised to $90.5 million–$92.0 million, with non-GAAP net income of $8.8 million–$10.3 million (EPS $0.31–$0.36) and adjusted EBITDA of $10.9 million–$12.4 million (12–13% margin). These targets assume weighted average shares outstanding of approximately 28.3 million for Q3 and 28.0 million for the full year.