eGain (EGAN): B. Riley and Roth Capital Both Cut Targets as AI Growth Struggles to Offset Legacy Declines

eGain Corporation (NASDAQ:EGAN) announced its fiscal 2026 fourth-quarter and full-year results on September 3, 2026. Despite a 3% rise in total revenue to $91.1 million, AI customer revenue increased by 20%. Adjusted EBITDA margin expanded to 15% from 10% the previous year, while operating cash flow hit a record $21.2 million. However, fiscal 2027 guidance was cut to $84.5 million to $86 million, falling short of the previous year's total, with an adjusted EBITDA margin expected to drop to 1% to 2%.

Despite the weaker outlook, eGain's AI-focused knowledge management systems were recognized by Gartner as a Leader in the Magic Quadrant, highlighting its potential for execution and comprehensive vision. New customer wins rose 27% year-over-year, and the number of pipeline opportunities with at least $500,000 annual recurring revenue doubled.

Customer willingness to pay for pilot programs before full deployment also improved, with self-service resolution reaching 95%. Despite the positive developments, B. Riley and Roth Capital both reduced their price targets for eGain Corporation, citing accelerating churn in the legacy non-AI business, which significantly reduced next year's revenue and profitability.