Good day, and welcome to the eGain Fiscal 2024 First Quarter Financial Results Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Jim Byers of MKR Investor Relations. Please go ahead.

Thank you, operator, and good afternoon, everyone. Welcome to eGain's Fiscal 2024 First Quarter 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. 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 are detailed on the company's reports filed with the Securities and Exchange Commission. eGain is making these statements as of today, November 2, 2023, and assumes no obligation to publicly update or revise any of the forward-looking information in this conference call. In addition to GAAP results, we will also discuss certain non-GAAP financial measures such as non-GAAP operating income. The tables included with the earnings press release issued today include reconciliation of the historical non-GAAP financial measures to the most directly comparable GAAP financial measures. And our earnings press release can be found by clicking the press release's link on the Investor Relations page of eGain's website at egain.com. And along with the earnings release, we will post an updated investor presentation to the Investor Relations page of eGain's website. And lastly, a phone replay of this conference call will be available for 1 week. And now 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 good start to our fiscal year. Both our top and bottom line results exceeded our guidance and street consensus for the quarter. Our adjusted EBITDA for the quarter at 12% was 600 basis points better than the year ago quarter. Turning to business highlights. We closed some nice new logos in the first quarter, including a large North American industrial distributor and a top 10 Canadian bank. We also saw continued expansion across our client base during the quarter. Some expansion plans included a large California state agency, one of the largest U.S. utilities, a U.K. financial services company, a global insurance provider and a U.S. health plan management provider. Looking at the market, the macro environment remains challenging. At the same time, we see continued pickup in evaluations and decision-making in our pipeline. These include new opportunities as well as reengagement from opportunities that were on hold. But what we are really excited about is the launch of AssistGPT, our newest product that we announced at the customer event in London in September. It's a first-of-its-kind solution that leverages generative AI to automate knowledge management, reducing human effort by up to 80%. The result is correct consumable answers served to contact center agents, reducing the cost of service. AssistGPT allows businesses to confidently use AI in the context of reliable knowledge content, effective controls and rich analytics within eGain's compliance, composable and scalable knowledge platform. Given the continued focus in the market on reducing business cost and improving agent experience, we believe that AssistGPT presents the biggest bank of the buck for businesses looking to invest in projects that improve business cost and improve agent experience. In fact, Gartner in 2022 recommended knowledge management as the #1…

Thanks, Ashu, and thanks, everyone, for joining us today. As Ashu noted, we delivered a significantly improved bottom line performance in the first quarter, reflecting the adjustments we made to operate more profitably in the current environment while continuing to invest in product innovation and customer success. Let me share more detail about our financial results for Q1 before getting into our outlook and guidance for Q2 and fiscal 2024. Starting with revenue. Total revenue for Q1 was $24.2 million, above our expectations, but down 2% year-over-year. When looking at revenue by region, North America accounted for 79% of total revenue this quarter, up from 77% in the year-ago quarter. North America continues to be our primary focus and market where we see the greatest opportunity. Total revenue for North America was $19 million, essentially unchanged year-over-year, but in contrast total revenue from Europe was $5.2 million, down 8% year-over-year. Looking at non-GAAP gross profits and gross margins. Gross profit for the quarter was $17.6 million for a gross margin of 73% compared to 76% for the prior year quarter and 74% last quarter. Now turning to operations. Non-GAAP operating costs for the quarter came in at $15 million, a 14% improvement from $17.5 million in the year ago quarter, reflecting the expense controls we have implemented. Looking at our bottom line, non-GAAP net income for the quarter was $3.8 million or $0.12 per share. This is up approximately 90% on a dollar basis from non-GAAP net income of $2 million or $0.06 per share in the year ago quarter. Adjusted EBITDA margin for the quarter was 12%, up 600 basis points from 6% in the year ago quarter. Turning to our balance sheet and cash flows. We generated very strong cash flow from operations for the quarter of $8.1…

[Operator Instructions] The first question comes from Richard Baldry with ROTH Capital.

Can you talk about sort of the early indications you're getting on where the greatest interest is in the AssistGPT? I'm sort of curious if there's certain verticals that seem to be looking at things faster? Is it to replace human interactions or -- for an ROI-based sale or maybe to automate things they previously didn't want to address because they thought the human side would be too expensive? Just a little more color around where you're seeing sort of the first opportunities.

Sure. So Rich, this is Ashu here. So with AssistGPT, we have applied generative capability across the whole platform. But where there is real interest in the market is around helping improve productivity in the knowledge creation, duration and improvement, optimization kind of cycles, right? That part of the assistance that we are automating with GPT is what seems to be most exciting to people because with knowledge management that has always been one of the challenges. So for example, with the new solution we have, we are seeing improvement in productivity of that knowledge management team going up by 3 to 4x, up to 80% improvement in sort of automation. So that's what we are seeing as the biggest pool. We are also seeing interest in agent assist, but that area is kind of -- there are many providers who have that, we have it too. But the knowledge management part is where the real excitement seems to be driven at this point.

And can you talk a little about what maybe your early thoughts are around pricing, pricing mechanisms? How much of a premium offering this would be or sort of an extension to existing things? Just can you kind of give us an idea of how much this might expand your addressable market?

That's a great question. Right now, we are making it super easy for people to try it and not create a barrier in terms of pricing upfront, but it's based on actual usage of the generative capability on the platform. That's the incremental fee. It's a little bit like how many sessions, so how many GPT requests you make in our platform. We are pricing that, and that's kind of the incremental revenue generation for us. But the part we are focusing on today is, and the initial market launch is, driving more adoption. And that's the approach we have taken.

And there's obviously a lot of hype around the generative side of the world. So do you feel like the low-hanging fruit is obviously going after existing customers who know you have a track record [ would you ] feel comfortable to quickly evaluating, adopting? Or is this really kind of opening new opportunities where people are seeking out vendors capable of offering solutions in the space rapidly with sort of some credibility so we get an idea for how you're going to be attacking the market from that direction?

Yes. At this point, I think what we see with the market interest is people -- even in the new logo conversations, people want a platform for knowledge that includes generative capability, but not just generative capability, right? So in the enterprise where we are selling, generative is a great addition and differentiation and excitement, but there's still a core need for our knowledge hub for all the core need of correct content, controls, analytics, all of the rest of it. So that's the place where we are focusing now.

The next question comes from Daniel Hibshman with Craig-Hallum Capital Group.

This is Daniel on for Jeff Van Rhee. Just on the improvement in pipeline activity, some of that reengagement you're seeing of clients that were in a sales cycle and previously were on hold. Just maybe if you could give us any additional color on those conversations, what those conversations are like? What's driving those customers to be engaged if there's any common themes either in terms of the conversations or the verticals that are coming back? Just any additional thoughts there?

So one dimension we see is these businesses seem to have gotten back into evaluating and running RFPs and structured sort of buying process. We're seeing that happening much more often now. So tire kicking is much less than, say, 6 months ago. So that's a big change we are seeing across the board. So many more of the early-stage conversations are resulting in time-bound RFPs. So that's not changed. We're seeing that across the board. In terms of verticals, I would say, financials and insurance seem to be fronting that. There's more excitement in that space on a vertical basis, but others are also getting in. So it's not that it's only in financial services and insurance. But yes, that sector seems to be leading the others.

And then maybe just one follow-up for me. In terms of the macro headwinds, just if we can dial that in a little bit in terms of do you see this mostly as general tech budget pressure? Is it particular to the contact centers? Is it particular to knowledge management? Is it uniquely the combination of general macro pressure as well as people taking a step back to assess AI and their road map? Maybe just give us some additional thoughts on the nature of the headwind.

Yes, I would say the AI assessment seems to have run its course a little bit, not entirely. I'm sure there are quite a few companies that are still doing that. But we see people who are coming back from their assessments and saying, all right, we need AI, we also need AI in the context of a knowledge platform so that we can actually use it and rely on it, right? So that's one thing I'll comment in the macro sense. I would say the other big comment would be just the overall geopolitical uncertainty in the economic environment. I think that budgets are still fairly cautious. That's the sense we get. But we do see items being budgeted for calendar '24. So there is a little bit of loosening of the first thing, but not as much as one would expect in a sort of more stable economic environment.

As there are no further questions, I would like to turn the conference back over to management for any closing remarks.

Thanks, operator, and thanks, everybody, for listening to the call. We look forward to hopefully seeing some of you at the investor conferences later this month and providing the updates at the end of our next quarter. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.