Good day, and welcome to the eGain Fiscal 2022 First Quarter Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jim Byers of MKR, Investor Relations. Please go ahead, sir.

Thank you, operator, and good afternoon, everyone. Welcome to eGain's first quarter fiscal 2022 financial results conference call. On the call today are eGain's Chief Executive Officer, Ashu Roy; and Chief Financial Officer, Eric Smit. Before we begin, I would like to remind everyone that during this conference call, management will make certain forward-looking statements which convey management's expectations, beliefs, plans and objectives regarding future financial and operational performance. Forward-looking statements are generally preceded by words such as believe, plan, intend, expect, anticipate or similar expressions. Forward-looking statements are protected by safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995, and these forward-looking statements are subject to a wide range of risks and uncertainties that could cause actual results to differ in material respects. Information on various factors that could affect eGain's results is detailed in the company's reports filed with the Securities and Exchange Commission. eGain is making these statements as of today, November 9, 2021, and assumes no obligation to publicly update or revise any of the forward-looking information on this conference call. In addition to GAAP results, we will discuss certain non-GAAP financial measures such as non-GAAP operating income. The tables included with the earnings press release include reconciliation of the historical non-GAAP financial measures to the most directly comparable GAAP financial measures. Our earnings press release can be found on the news release link on the Investor Relations page at eGain's website at www.egain.com, and a phone replay of this conference call will be available for 1 week. Now, with that said, I'd like to turn the call over to eGain's CEO, Ashu Roy.

Thank you, Jim, and good afternoon, everyone. We are off to a very good start to fiscal '22. In the first quarter, we delivered record revenue of $21.5 million, that is 13%, year-over-year growth. Our quarterly SaaS revenue grew 20% year-over-year, and we increased our sales and marketing investment in the quarter by 25% year-over-year. So our business momentum is building nicely around the eGain knowledge hub, our recently launched solution that raises the bar on knowledge powered automation of customer engagement. Our timing is good because in a recently published report, Gartner analysts cited, and I quote, knowledge management is the number one technology for enhancing the 3 main customer service perspectives of operational performance, CX and employee experience, end quote. That is quite a statement about the value of knowledge for customer service. What we are seeing now is that, deals that had paused during the early stage of the pandemic, because of the heightened focus from businesses to virtualize their service operations and keep them running, are all coming back to life. Investment in agent experience and automation is getting prioritized again. In parallel, our sales and marketing investments we began just over a year ago, are now starting to yield results. Our first cohort of sales reps who we hired late last year roughly, are now productive. And now we are substantially complete with the hiring of our second cohort, who are all in the process of being onboarded, trained and ramped up. It's a good timing in terms of the market and our increased investment. Some of that's starting to show in our performance. Turning to some new logo wins in the quarter. We added exciting new logos. Let me share some examples. One was a hypergrowth crypto exchange business. We did mention them in…

Thanks, Ashu, and thanks, everybody, for joining us today. As Ashu noted, we are off to a very good start to our new fiscal year with top and bottom line results that exceeded our guidance and we're ahead of Street consensus. Looking at our financial results. We generated record revenue of $21.5 million, with a return to double-digit total revenue growth of 13% year-over-year and up 6% sequentially. SaaS revenue was $19.2 million, up 20% year-over-year and accounted for 89% of total revenue. Looking at non-GAAP gross profits and gross margins. Gross profit for the quarter was $16.7 million or a gross margin of 78%, up 200 basis points from 76% a year ago. Now turning to operations. Non-GAAP operating costs for the quarter came in at $13.9 million compared to $11.7 million in the year ago quarter. The increase was primarily driven by investments in sales and marketing, which increased 25% year-over-year. Looking at our bottom line. Non-GAAP operating income in the quarter was $2.8 million or an operating margin of 13% compared to an operating margin of 15% in the year ago quarter. Non-GAAP net income for the quarter was $2.7 million or $0.08 per share. This compares to non-GAAP net income of $2.5 million or $0.08 per share in the year ago quarter. Turning to our balance sheet and cash flows. Our balance sheet remains strong. During the quarter, we generated cash flow from operations of $7.2 million or an operating cash flow margin of 33%, up from $5.8 million or 30% margin in the year ago quarter. Total cash and cash equivalents at the end of the quarter was $70.4 million, up 33% from a year ago. Now turning to our customer metrics. As Ashu mentioned, we had very good bookings in the quarter, a combination…

[Operator Instructions] And we'll take the first question from the line of Tim Horan with Oppenheimer.

This is actually Edward Gang for Tim Horan. Ashu was -- I was very interested to hear your comment about the FedRAMP certification by year-end. You mentioned it's a tip of the demand iceberg. I was wondering if you could quantify or size up that opportunity?

Yes. Sure. I can give you some color. So what we are seeing from our existing clients in the government space -- so that is more and more investment going into the whole sort of digital transformation area. And part of that is trying to figure out how to improve automation of the self-service capabilities as well as improving the agent experience and agent tools. For example, we just put out a press release a few days ago where we talked about how I'm going to be doing a keynote with one of the CIOs as one of our client agencies, federal agencies. And we're going to be talking about again, knowledge and AI used in automating the citizen engagement and then improving agent experience as well. So what we are seeing just anecdotally as well as looking at the market stat, that the federal and state -- not so much local, but definitely, federal and state seem to be increasing their investment in the customer and citizen engagement area, and that's really where our confidence is coming from. Plus we are seeing more activity in our pipeline, even when we don't have the FedRAMP certification completed yet. Of course, people are aware that we are very close to it because they can see it on the FedRAMP website. So all that put together kind of gives us that added confidence around the incremental opportunity.

And maybe just a couple of modeling questions for Eric. What was the D&A and CapEx in the quarter? And if you could provide a projection for the year? And your legacy revenue -- sales revenue actually rose sequentially. So I was wondering what the cadence would look like on that line item for the rest of the year.

Sure. First off, I'll just respond to your last question. So for the legacy business, you're correct. There was a slight uptick. This was actually a catch-up from a customer renewal. Although, as we look forward, certainly, the expectation is that this number will continue to decline. So as we've discussed on previous calls, at this stage, the remaining legacy customers -- we're working on actively moving them to the cloud. Some of them have internal IT requirements that have delayed the move, but overall, through the remainder of the year, we would expect this number to continue to decline. And then, for the question around CapEx, when I look at the --

CapEx, D&A.

Sorry, yes. So G&A. So for the G&A -- sorry, just to be clear on the question. On the G&A question, the --

I meant D&A depreciation and amortization?

Sorry. Okay. So for the quarter, the depreciation and amortization payment was about -- just over $100,000. And again, from a modeling perspective, we expect that -- close to that for the quarter and about $500,000 for the year.

And CapEx?

And CapEx was probably just over about $150,000. And again, for the year in that $0.5 million range.

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

Well, thanks, operator, and thanks, everybody, for listening today. As I've mentioned, we've got several upcoming investor conferences. So hopefully, we'll have the opportunity to connect with you at one of those events, and we look forward to providing you an update when we announce our Q2 financial results. Thank you.

Ladies and gentlemen, this does conclude today's call. Thank you for your participation. And you may now disconnect your lines.