2024-03-08 16:52:02 ET
Summary
- eGain's shares dropped after the non-renewal of two customers, but management remains optimistic about the prospects of its core knowledge management business.
- eGain's generative AI product, AssistGPT, has the potential to drive significant new logo wins.
- With nearly half its market cap in cash trading at 9x EBITDA, we feel that the market is misunderstanding the company's growth prospects.
- We see a path to EBITDA tripling by FY26 in our bull case, resulting in a material undervaluation at current levels.
Intro
We believe that an investment in eGain Corporation (EGAN) represents an inexpensive way to gain exposure to long-term generative AI tailwinds. Shares sold off sharply after the company reported its F2Q24 earnings on February 8 due to the non-renewal of two customers that represented $8M in ARR (8% of annualized revenue). Despite the loss of these two customers, management seemed enthusiastic about the prospects of the business and expects to see continued positive momentum in new business activity given the level of interest in its AssistGPT generative AI product. Given the quantity of potential customers currently undergoing Knowledge Hub trials, we believe significant new logo wins are forthcoming. We urge investors to keep an eye out for new logo wins, which we believe will validate our thesis.
Company Description
eGain is a provider of knowledge SaaS products for contact centers that assists with automating customer engagement for its customers' contact center agents. The company's software improves the customer-to-contact center agent experience through automation and analytics by:
- Improving first contact resolution rates.
- Decreasing the time it takes for contact center agents to become competent.
- Ensuring compliance with regulations, policies, and best practices.
Read the full article on Seeking Alpha
For further details see:
EGAN: Misunderstood AI Growth Story At A Mouthwatering Valuation