EGAIN (EGAN) risk factors, FY2025 10-K

Risks Related to Our Business and Strategy

1. 01Our business is influenced by a range of factors that are beyond our control and that we have no comparative advantage in forecasting
2. 02Our revenue and operating results have fluctuated in the past and are likely to fluctuate in the future, and because we recognize revenue from subscriptions over a period of time, downturns in revenue may not be immediately reflected in our operating results
3. 03Our business is highly dependent on our ability to continue to expand our SaaS business and cloud operations, including keeping pace with the market transition to SaaS solutions. If customers choose not to renew, or reduce, their subscriptions, our operating results and financial results will suffer
4. 04We cannot accurately predict subscription renewal rates and the impact these rates may have on our future revenue and operating results
5. 05Our lengthy sales cycles and the difficulty in predicting timing of sales or delays may impair our operating results74% rewritten
6. 06Since our potential customers may evaluate our products before, if ever, executing definitive agreements, we may incur substantial expenses and spend significant management and legal effort in connection with a potential customerNew
7. 07Because we depend on a relatively small number of customers for a substantial portion of our revenue, the loss of any of these customers or our failure to attract new significant customers could adversely impact our revenue and harm our business
8. 08The market for customer engagement software, including generative AI product offerings, is competitive, and our business will be adversely affected if we are unable to successfully compete
9. 09If we fail to expand and improve our sales performance and marketing activities, or retain our sales and marketing personnel, we may be unable to grow our business, which could negatively impact our operating results and financial condition27% rewritten
10. 10Our failure to maintain, develop, or expand strategic and third-party distribution channels would impede our revenue growth
11. 11Difficulties and delays in customers implementing our products could harm our revenue and margins
12. 12We conduct a significant portion of our business and operations outside of the U.S., which exposes us to additional risks that may not exist in the U.S. These risks in turn could cause our operating results and financial condition to suffer42% rewritten
13. 13Any of the above risks could adversely affect our international operations, reduce our revenue from customers outside of the U.S. or increase our operating costs, each of which could adversely affect our business, results of operations, financial condition, and growth prospects26% rewritten
14. 14Unplanned system interruptions, delays in service or inability to increase capacity, including internationally, at our third-party data center facilities or third-party Platform-as-a-Service (PaaS) providers could impair the use or functionality of our cloud operations and harm our business
15. 15Software errors could be costly and time-consuming for us to correct, and could harm our reputation and impair our ability to sell our solutions
16. 16We have invested, and expect to continue to invest, substantial resources to expand, market, implement, and refine our cloud offerings. If we are unable to increase the volume of our subscription business, we may not be able to achieve sustained profitability
17. 17We depend on broad market acceptance of our applications and of our business model. If our expectations regarding the market for our applications are not met, our business could be seriously harmed29% rewritten
18. 18We may be unable to respond to the rapid technological change and changing customer preferences in digital customer engagement, marketing, and service and this may cause our business to suffer
19. 19Our offshore product development, support and professional services may prove difficult to manage or may not allow us to realize our cost reduction goals, produce effective new solutions and provide professional services to drive growth
20. 20If we are unable to hire and retain key personnel, our business and results of operations would be negatively affected
21. 21We may not be able to realize the benefits of offering the limited, free “Innovation in 30 Days” version of our service
22. 22We may not be able to raise additional capital on acceptable terms, if at all, or without dilution to our stockholders, which could limit our ability to grow our business and expand our operations
23. 23Our provision may be insufficient to cover accounts receivable we are unable to collect
24. 24If we acquire companies or technologies, we may not realize the expected business benefits, the acquisitions could prove difficult to integrate, disrupt our business and adversely affect our operations
25. 25We may be subject to legal liability and/or negative publicity for the services provided to consumers through our technology platforms
26. 26proposed that could prohibit or impose liability for the transmission over the Internet of certain types of information. Our defense of any of these actions could be costly and involve significant time and attention of our management and other resourcesNew
27. 27Changes in privacy and data protection laws and regulations, including the European Union (such as the GDPR), the United Kingdom, and other jurisdictions in which we operate, could expose us to risks of noncompliance and costs associated with compliance65% rewritten
28. 28Privacy concerns and laws, evolving regulation of cloud computing, AI and other domestic or foreign regulations may limit the use, functionality and adoption of our solutions and adversely affect our business80% rewritten
29. 29The costs of compliance with and other burdens imposed by laws, regulations and standards may limit the use and adoption of our service and reduce overall demand for it, or lead to significant fines, penalties or liabilities for any noncompliance
30. 30Issues in the development and use of AI may result in reputational or competitive harm or liability77% rewritten
31. 31Anti-corruption, anti-bribery, and similar laws, and failure to comply with these laws, could subject us to criminal penalties or significant fines and harm our business and reputation
32. 32Industry-specific regulation is evolving and unfavorable industry-specific laws, regulations or interpretive positions could limit our ability to provide services and harm our business56% rewritten
33. 33to certain customers. If we are unable to achieve or maintain these industry-specific certifications or other requirements or standards relevant to our customers, it could adversely affect our ability to provide our services to certain customers and harm our businessNew
34. 34We face risks related to pandemic and public health emergencies which could have a material adverse effect on our business, financial condition and results of operations37% rewritten
35. 35Changes to current accounting policies could have a significant effect on our reported financial results or the way in which we conduct our business
36. 36Changes in domestic and foreign trade policies, including the imposition of tariffs and retaliatory tariffs, and other factors beyond our control may adversely impact our business, financial condition, and results of operationsNew

Risks Related to Intellectual Property

1. 37We have been and may in the future be sued by third parties for various claims including alleged infringement of proprietary rights that can be time-consuming, incur substantial costs, and divert the attention of management, which could adversely affect our operations and cash flow
2. 38We are, and may in the future be, subject to claims, lawsuits, and other proceedings in the ordinary course of business, including those involving alleged infringement of third-party patents and other intellectual property rights, and commercial, labor and employment, and other matters
3. 39We rely on trademark, copyright, trade secret laws, contractual restrictions and patent rights to protect our intellectual property and proprietary rights and, if these rights are impaired, then our ability to generate revenue will be harmed
4. 40Our failure or inability to develop non-infringing technology or license proprietary rights on a timely basis would harm our business
5. 41Our stock price has demonstrated volatility and continued market conditions may cause declines or fluctuations22% rewritten
6. 42Our insiders who are significant stockholders have the ability to exercise significant control over matters requiring stockholder approval, including the election of our board of directors, and may have interests that conflict with those of other stockholders26% rewritten