eGain Announces Financial Results for the Quarter and Fiscal Year Ended June 30, 2005

Market Wire, September, 2005

-- Fourth quarter highlights
          -  Revenue up 24% year-over-year
          -  License revenue up 200% year-over-year
          -  Net profit from operations improves to $20,000
             from a prior year fourth fiscal quarter net loss
             from operations of $717,000

-- Fiscal year 2005 highlights
          -  Revenue up 4% year-over-year
          -  License revenue up 47% year-over-year
          -  Net profit from operations improves to
             $212,000 from a prior fiscal year net loss
             from operations of $4.4 million

eGain Communications Corporation (OTC BB: EGAN), a leading provider of customer service and contact center software, today announced financial results for the fourth quarter and fiscal year ended June 30, 2005.

Revenue for the quarter ended June 30, 2005 was $5.8 million, an increase of $1.1 million or 24% from the comparable year-ago quarter. For the fiscal year ended June 30, 2005, revenue was $20.4 million, an increase of $825,000 or 4% compared to revenue of $19.6 million in fiscal year 2004.

Net loss applicable to common stockholders for the quarter ended June 30, 2005 was $277,000, or $0.02 per share, compared to a net loss applicable to common stockholders of $2.8 million, or $0.77 per share, for the same quarter a year ago. For the fiscal year ended June 30, 2005, net loss applicable to common stockholders was $4.6 million, or $0.47 per share, compared to a net loss applicable to common stockholders of $12.3 million, or $3.33 per share for the fiscal year 2004.

Pro forma net income for the quarter ended June 30, 2005 was $149,000 or $0.01 per share, compared to a pro forma net loss of $34,000, or $0.00 per share, for the same quarter a year ago. For the fiscal year ended June 30, 2005, pro forma net loss was $178,000, or $0.01 per share, compared to a pro forma net loss of $563,000, or $0.04 per share, for fiscal year 2004. Pro forma net income (loss) figures exclude depreciation, amortization, accreted dividends, interest expense, tax expense and restructuring charges. A table reconciling the pro forma net income (loss) to GAAP net loss is included in the condensed consolidated financial statements in this release.

Total cash and cash equivalents were $4.5 million at June 30, 2005, compared to $5.2 million at June 30, 2004. Days sales outstanding in receivables for the June 2005 quarter were 71 days compared to 55 days for the comparable year-ago quarter.

"We are pleased with our overall performance for fiscal year 2005," said Ashu Roy, CEO of eGain. "We increased revenues and recorded a profit from operations for the fiscal year, a first in eGain's history. We see increased adoption for eGain Service(TM) 7, our awardwinning suite for implementing customer interaction hubs, across the enterprise and midmarket businesses and look forward to continuing this positive momentum in fiscal year 2006."

Fiscal 2005 business highlights

Industry recognition

eGain Service 7 won highly coveted industry awards during FY2005:

--  "Best-of-breed" recognition from Forrester and Patricia Seybold Group.
    The suite received the #1 rating in the "current offering" category in the
    2005 eService ForresterWave(TM) research report, and also in Patricia
    Seybold Group's Bull's Eye Reports on customer service overall as well as
    multiple sub-domains in customer service software -- knowledge management,
    architecture, and analytics. All the reports used a comprehensive
    evaluation framework to rate the solutions.

--  Selected as one of three finalists in eWeek's fifth Annual Excellence
    Awards Program in the Business Relationship Management category.

--  "Positive" rating from Gartner in its eService suites marketscope
    report.

--  "Product of the year" award for 2004 from Customer Inter@ction
    Solutions magazine for demonstrating product excellence and delivering a
    compelling return on investment to customers.

--  Top score among all vendors for email response management, and the top
    scores for knowledge base, search technology, and reporting and analysis
    among publicly held peers in Forrester's 2004 eService TechRankings.

--  eGain was included in the 2004 Deloitte Technology Fast 500 North
    America, a ranking of the fastest growing technology companies in North
    America, based on percentage revenue growth for the past five fiscal year
    period (1999 to 2003).
    

Market demand

On the heels of its pioneering eService study, eGain sponsored a second study -- conducted by BenchmarkPortal, focused exclusively on small and medium-sized businesses (SMBs). The study revealed that online customer service provided by SMBs is even worse than the service level offered by large enterprises, further validating the need for robust multichannel online service solutions.

Partnerships

--  Aspect has validated eGain Mail(TM), an integral part of eGain Service
    7, on Aspect® Uniphi Suite version 6.1, the latest release of Aspect's
    applications convergence platform for contact centers. Customers can use
    eGain's solution in an Aspect Uniphi Suite environment to integrate email-
    based customer care into their contact centers.

--  eGain's knowledge management solution has been certified for use with
    HP ServiceDesk(TM).  The combined solution will help IT service management
    groups in global enterprises maximize their return on knowledge investments
    and promote self-service.

--  eGain's knowledge management solution has also been integrated with
    Remedy'sAction Request System(TM). The integration will improve problem
    resolution effectiveness and efficiencies in customer helpdesks.

--  In July 2004 eGain announced a strategic global partnership with Wipro
    Technologies, one of the world's fastest growing global IT services
    organizations. Wipro will offer system integration services around eGain's
    entire product suite.