eGain Announces Increase to Stock Repurchase Program of $20 Million

Rhea-AI Summary

eGain (Nasdaq: EGAN), a leading AI knowledge platform for customer service, has announced a $20 million increase in its stock repurchase program. This raises the total authorization from $20 million to $40 million. As of May 23, 2024, the company has repurchased approximately $19.3 million worth of shares, allowing for an additional $20.7 million to be repurchased. The program's extension will continue until the full amount is repurchased or the Board decides to terminate it. Repurchases will be made through open market or privately negotiated transactions, and potentially under a Rule 10b5-1 plan. The initiative will be funded by existing cash or future cash flows.

Positive

• eGain has increased its stock repurchase program by $20 million, showing financial strength.
• The total authorization for repurchases now stands at $40 million, indicating confidence in the company's undervaluation.
• Approximately $20.7 million of shares remain available for repurchase, providing flexibility for future buybacks.
• The program will be funded using existing cash or future cash flows, demonstrating robust liquidity.

Negative

• No obligation for eGain to acquire a specified number of shares, adding uncertainty about the actual repurchase timeline.
• The Board may modify, suspend, or discontinue the repurchase program at any time, which could affect stockholder expectations.

Insights

Financial Analyst

The announcement by eGain to increase its stock repurchase program by $20 million is noteworthy for several reasons. Stock buybacks are typically viewed as a signal that a company believes its shares are undervalued. By repurchasing shares, the company can reduce the number of shares outstanding, which can increase earnings per share (EPS) and potentially boost the stock price. Additionally, it can be seen as an expression of confidence in the company's future prospects. eGain’s decision to extend the repurchase program until the allocation is exhausted or the Board decides otherwise adds flexibility, allowing the company to adapt to changing market conditions.

Investors should note that while buybacks can be beneficial, they also mean that the company is using its cash reserves. The fact that eGain plans to fund the buybacks using existing cash or future cash flows indicates that it has a sufficiently strong cash position to not adversely affect its operational liquidity. However, it is important for investors to consider the opportunity cost of this cash allocation—whether the same funds could be better used for other investments, like research and development or acquisitions, which might offer higher returns in the long run.

From a strategic perspective, eGain’s buyback decision reinforces its belief in the long-term potential of the AI knowledge market. Yet, investors should remain cautious and monitor the company’s financial health and market dynamics closely.

Market Research Analyst

The extension of eGain’s stock repurchase program highlights its confidence in the AI knowledge platform market. This move is particularly interesting in the context of the growing competition and innovation within the AI and customer service sectors. By increasing the buyback program, eGain is signaling to the market that it perceives its stock as undervalued, hoping to attract more investor attention and improve its market valuation.

From a market perspective, buybacks can be seen as a double-edged sword. On one hand, they can enhance shareholder value by improving financial metrics and showing confidence in the company's prospects. On the other hand, they might be interpreted as the company not having enough growth opportunities to invest in, which could be a concern in a rapidly evolving industry like AI. It’s important for investors to consider whether eGain’s market strategy shows sufficient innovation and capacity to stay ahead in this competitive space.

Moreover, the discretionary nature of these repurchases, including the ability to use a Rule 10b5-1 plan, provides eGain with operational flexibility. It’s a prudent approach given the market volatility and regulatory constraints. Investors should watch how this flexibility is exercised and whether it translates into tangible improvements in share performance and market positioning.

SUNNYVALE, Calif., May 31, 2024 (GLOBE NEWSWIRE) -- eGain (Nasdaq: EGAN), the AI knowledge platform for customer service, announced today that its Board of Directors approved a $20 million increase in its stock repurchase program, bringing the aggregate amount eGain may purchase thereunder from $20 million to $40 million of its outstanding common stock.

"Our strong balance sheet allows us to focus on driving long-term shareholder value. This increased authorization underscores our belief that our shares are undervalued and demonstrates our confidence in the AI knowledge market opportunity," said Ashu Roy, eGain’s CEO.

As of May 23, 2024, eGain has repurchased approximately $19.3 million of shares of its common stock under its stock repurchase program, leaving approximately $20.7 million of shares of its common stock available for repurchase after the increase. The Board of Directors also approved to extend the stock repurchase program until the earlier of (i) the date the aggregate amount of shares that can be repurchased under the stock repurchase program have been repurchased and (ii) the date the Board of Directors decides to terminate the stock repurchase program.

Under the stock repurchase program, eGain 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 eGain. In addition, at the discretion of eGain, 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 eGain 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 capital availability. The stock repurchase program does not obligate eGain to acquire a specified number of shares and may be modified, suspended, or discontinued at any time at eGain’s discretion without notice.

The stock repurchase program will be funded using existing cash or future cash flows.

About eGain

eGain Knowledge Hub helps improve experience and reduce cost by delivering trusted answers for customer service. Visit www.egain.com for more info.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, including without limitation: statements regarding the timing, scope, and funding of our stock repurchase program; our belief that our shares are undervalued; our focus and market opportunity; and the expected benefits of our products. The achievement or success of the matters covered by such forward-looking statements involves risks, uncertainties, and assumptions, many of which involve factors or circumstances that are beyond our control. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, our actual results could differ materially from the results expressed or implied by the forward-looking statements we make. The risks and uncertainties referred to above include, but are not limited to: risks to our business, operating results, and financial condition; risks associated with new product releases and new services and products features; risks that customer demand may fluctuate or decrease; risks that we are unable to collect unbilled contractual commitments, particularly in the current economic environment; risks that our lengthy sales cycles may negatively affect our operating results; currency risks; our ability to capitalize on customer engagement; risks related to our reliance on a relatively small number of customers for a substantial portion of our revenue; our ability to compete successfully and manage growth; our ability to develop and expand strategic and third party distribution channels; risks related to our international operations; our ability to continue to innovate; our strategy of making investments in sales to drive growth; general political or destabilizing events, including war, intensified international hostilities, conflict or acts of terrorism; the effect of legislative initiatives or proposals, statutory changes, governmental or other applicable regulations and/or changes in industry requirements, including those addressing data privacy, cyber-security and cross-border data transfers; and other risks detailed from time to time in eGain’s public filings, including eGain’s annual report on Form 10-K for the fiscal year ended June 30, 2023 and subsequent reports filed with the Securities and Exchange Commission, which are available on the Securities and Exchange Commission’s website at www.sec.gov. These forward-looking statements are based on current expectations and speak only as of the date hereof. We assume no obligation and do not intend to update these forward-looking statements, except as required by law.

eGain, the eGain logo, and all other eGain product names and slogans are trademarks or registered trademarks of eGain Corporation in the United States and/or other countries. All other company names and products mentioned in this release may be trademarks or registered trademarks of the respective companies.

MKR Investor Relations
Todd Kehrli or Jim Byers
Phone: 323-468-2300
Email: egan@mkr-group.com

FAQ

What is the new total authorization for eGain's stock repurchase program?

The new total authorization for eGain's stock repurchase program is $40 million.

How much has eGain already repurchased under the stock repurchase program?

As of May 23, 2024, eGain has repurchased approximately $19.3 million of shares.

How will eGain fund the stock repurchase program?

eGain will fund the stock repurchase program using existing cash or future cash flows.

What is Rule 10b5-1 in relation to eGain's stock repurchase?

Rule 10b5-1 allows eGain to repurchase stock even when it might be precluded from doing so under insider trading laws or self-imposed trading restrictions.

Can eGain modify or discontinue the stock repurchase program?

Yes, eGain can modify, suspend, or discontinue the stock repurchase program at its discretion without notice.