Good day, ladies and gentlemen and welcome to the eGain Third Quarter Fiscal 2012 Results Conference Call. [Operator Instructions]. I would now like to turn the call over to Jim Byers of MKR Group.

Thank you, Operator. Good afternoon, ladies and gentlemen, thank you for joining us today for eGain's conference call to discuss results for the fiscal 2012 third quarter ended March 31, 2012. Please note this call is being recorded and will be available for replay from the Investor Relations section of our website at www.egain.com for 7 days following this call. Before I begin, I would like to remind all listeners that all statements that involve eGain's forecasts, beliefs, projections and expectations, including but not limited to our financial performance and guidance, anticipated growth of our business, market trends, plans to invest in our business and expectations regarding the market acceptance of our products are forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, which are based on information available to eGain at the time of this call, are not guarantees of future results. Rather, they are subject to risks and uncertainties that may cause actual results to differ materially from those set forth in this release. These risks include, but are not limited to, the uncertainty of demand for eGain products, including our guidance regarding bookings and revenue, our expectations related to our operations, our ability to invest resources to improve our products and continue to innovate, our partnerships, our future markets and other risks detailed from time to time in eGain?s filings with the Securities and Exchange Commission, including eGain?s annual report on form 10-K filed on September 27th, 2011, and eGain?s quarterly reports on form 10-Q. EGain assumes no obligation to update these forward-looking statements. With me today are Ashu Roy, Chairman and Chief Executive Officer, and Eric Smit, CFO of eGain Communications. To begin management's discussion, I would now like to turn the call over to Ashu.

Thank you, Jim, and good afternoon, everyone. Thank you for joining us today. We are pleased to report a solid quarter for the company. We delivered strong growth in both revenue and new bookings during our third quarter, growth that reflects continued business momentum. During the last 12 months, we have significantly increased our sales and marketing initiatives to address a growing market for our solutions, as consumer-centric enterprises increasingly demand a single platform for multichannel sales and service. We are seeing positive returns from the investments we have made in our sales force, that we doubled in size over the past year. We are also seeing early contribution from our growing strategic distribution partnerships like SAP that are beginning to show strength with steadily-building pipelines. Thanks to a dynamic competitive environment, our sales investments, our distribution partnerships and product leadership, we see a steady uptick in our win rate in large enterprises. For instance, during the quarter we signed a significant new agreement with a Fortune 50 global technology company that represents the first deal through our new relationship with SAP that we just announced back in February. Also, this quarter we entered into a new partnership agreement with Nokia Siemens Network, or NSN, a leading global technology solution provider, for the telecom vertical. This partnership will help us reach telecom operators in emerging markets, even as our solution strengthens NSN’s turnkey solution footprint in areas of multichannel customer service and cell service. Our OEM partnership with Cisco, which targets enterprises, continues to do well, and our mid-market solution, integrated with Cisco's Contact Center Express product, is now successfully deployed at 2 clients in the U.S., with more scheduled to go live this quarter. As you know, these mid-market deals are smaller, typically in the tens of thousands of dollars range, compared to our direct deals, typically in the hundreds of thousands of dollars range. However, the leverage we gain through the channel, and its reach in the fast-growing mid-market, is valuable to us. We are seeing increasing commitment from Cisco partners to train their sales force on selling the eGain solution as a value add to Cisco's Express product. We look forward to sharing more results on our channel-based mid-market initiative over the coming quarters. As we noted in our last conference call, we continue to experience a significant increase in demand for our hosted solutions compared to our on-premise solutions. This trend continued during the third quarter. In fact, it accelerated. And that's a good thing for us because that gives us more revenue visibility. Now let us turn to look at some business wins during the quarter. As I noted earlier, we signed a large hosted agreement with a Fortune 50 global technology provider for our multichannel service suite. This represents the first deal signed through our partnership with SAP. We also signed a hosted agreement with a leading health care provider in the U.S. for a secure, paperless member notification solution, which is a part of our customer interaction hub. Another interesting win during the quarter was a hosted win with a top auto manufacturer, to power interactive sales and service on their branded websites. In fact, you can now see eGain Chat in action as a result of this, on their branded websites including Cadillac, GMC, Buick, Chevrolet and Pontiac. This quarter, one of our large clients in the insurance sector chose to migrate their on-premise eGain deployment to the eGain hosted network. By focusing on their core competence and having eGain deliver the solution on demand, they plan to cost-effectively accelerate their transmission initiatives. We agree with their assessment. We continue to expand our Vodafone relationship as well, by signing a new Vodafone operating company in Central Europe for the hosted web customer service solution from eGain. We continue to effectively partner with Vodafone to help them deliver exceptional customer experiences, while reducing the cost of service across multiple operating companies. One of our large telco clients in North America is now expanding its eGain service deployment with interactive sales apps. They plan to enhance their web sales process with assisted selling capabilities, offering intelligent, real-time help integrated with secure cobrowsing. Such innovation across sales and service interactions create delightful experiences that differentiate a brand in commoditized, crowded markets. Our successful deployment of Canon U.S.A., something we talked about in the past, was recently featured at the Gartner CRM Summit in Orlando this March. Joe Warren, Canon's SVP of Customer Support, eloquently presented their business case and experience with eGain's multichannel service platform. You can watch the video at the Gartner website. Just search for Canon and eGain. Based on this early success, Canon is now expanding its eGain deployment with our social and sales apps. With the success our clients are experiencing with customer-facing knowledge management investments, we now see an emerging trend of knowledge management being deployed across the enterprise. One of our leading telco clients has built a shared service knowledge platform that systematically maps business processes, including most customer-facing ones, into rich, guided journeys, which include next best actions and compliance, to ensure best practice execution with minimal training. This concept of enterprise-wide knowledge management is not new. What is new, however, is the recent convergence of business need and technology maturity in this under-tapped area of business improvement. We believe that eGain is in a unique position, thanks to our rich knowledge suite and deep industry experience, to help clients transform their business with proven knowledge management technology and best practices. So, summarizing the trends we are seeing in the market. One, we continue to see more hosting demand, compared to on-premise. We are happy about it because, as we said, it creates more visibility in revenue terms for us. It also aligns well with the increasing need for speed and scale among our enterprise clients. On-demand delivery of our solutions frees up their valuable IT resources to focus on business-specific technology investments. Two, we see a growing demand for multichannel sales and service solutions on a common platform. Businesses are gravitating toward vendors with broad and deep capabilities across sales and service, and eGain is well-positioned to meet this need. Finally, knowledge everywhere, as a concept, is an early trend among large enterprises. We see businesses expanding their use of knowledge management across the enterprise, based on success in optimizing customer-facing processes with knowledge management. The co-innovation opportunity we see with some of our clients can be replicated across the market, and we plan to pursue this opportunity. Now I'd like to turn the call over to Eric Smit, our CFO, to discuss our financial performance for the quarter and fiscal year, and then we?ll be happy to take questions. On that note, Eric?

Thank you, Ashu. Before I walk you through our financial results, I want to provide an overview of our bookings metrics. New bookings, comprising new contractual commitments from new hosting, license and support bookings for the quarter, were $7.5 million, an increase of 98% from the comparable year-ago quarter. New bookings for the 9 months ended March 31st, 2012, were $21.1 million, an increase of 12% from the same period last year. Of the total new bookings in the quarter, 63% were from new hosting bookings and 37% from new license and support bookings. This compares to 44% from new hosting bookings and 56% from new license and support bookings in the comparable year-ago quarter. Gross bookings, comprising new bookings plus renewals and billed professional services for the quarter, were $12.6 million, an increase of 27% from the comparable year-ago quarter. New bookings for the 9 months ended March 31st, 2012 were $21.1 million, an increase of 12% from the same period last year. Of the total new bookings for the 9 months ending March 31st, 2012, 44% were from new hosted bookings and 56% from new license and support bookings, compared to 26% from new hosting bookings and 74% from new license and support bookings in the same period last year. Gross bookings for the 9 months ended March 31st, 2012 were $35.1 million, an increase of 3% from the same period last year. Note that the 9-month comparison was adversely impacted by a large license deal that occurred in the first quarter of fiscal 2011. Now turning to our financial results. Total revenue for the quarter was $11.5 million, an increase of 29% from the comparable year-ago quarter. Total revenue for the 9 months ended March 31st, 2012 was $32.7 million, an increase of 4% from the same period last year. License revenue for the quarter was $2.8 million, an increase of 67% from the comparable year-ago quarter. License revenue for the 9 months ended March 31st, 2012 was $8.8 million, a decrease of 25% from the same period last year. While the number of license transactions have increased this fiscal year, license revenue decreased due to the large license fee received in the first quarter of fiscal 2011. Recurring revenue for the quarter was $5.8 million, an increase of 12% from the comparable year-ago quarter. Looking at the recurring revenue in more detail, both hosting and support revenue was up 12% from the comparable year-ago quarter. Recurring revenue for the 9 months ended March 31st, 2012 was $17.3 million, an increase of 16% from the same period last year. Hosting revenue was up 16% and support revenue was up 17% from the same period last year. Professional services revenue for the quarter was $2.9 million, an increase of 40% from the comparable year-ago quarter. Professional services revenue for the 9 months ended March 31st, 2012 was $6.7 million, an increase of 36% from the same period last year. Looking at our gross profits and gross margins, gross profit for the quarter was $8 million, or a gross margin of 70%, up from $6.1 million or a gross margin of 69% in the comparable year-ago quarter. If you look at the gross margins for each revenue type, recurring revenue gross margin improved to 77% from 74% in the comparable year-ago quarter, and the professional services margin was 26%, down from 31% in the comparable year-ago quarter. Gross profit for the 9 months ended March 31st, 2012 was $23.2 million, or a gross margin of 71%, down from $23.4 million, or a gross margin of 75%, for the same period last year. This decrease was due to the decrease in license revenue as a percentage of total revenue. The recurring revenue gross margin for the 9 months ended March 31st, 2012 improved to 77% from the same period last year. The professional services gross margin for the 9 months ended March 31st, 2012 was 16%, unchanged from the same period last year. Turning to our operating costs, total operating costs and expenses for the quarter were $9 million, an increase of $3.6 million, or 67%, from the comparable year-ago quarter, most of the increase coming from our planned increased investments in sales and marketing. Total operating costs and expenses for the 9 months ended March 31st, 2012, were $23.7 million, an increase of $7.5 million or 47% from the same period last year. Included in the total costs and expenses were a stock-based compensation expense for the quarter of $255,000, compared to $54,000 in the comparable year-ago quarter. The stock-based compensation for the 9 months ended March 31st, 2012 was $520,000, up from $158,000 for the same period last year. GAAP loss from operations for the quarter was $935,000, or an operating loss of 8%, compared to an income from operations of $757,000, or an operating margin of 8%, in the comparable year-ago quarter. Loss from operations for the 9 months ended March 31st, 2012 was $474,000, or an operating loss margin of 1%, compared to an income from operations of $7.3 million, or an operating margin of 24%, for the same period last year. Net loss for the fiscal third quarter was $1.2 million, or a loss of $.05 per share, compared to net income of $567,000, or $.03 per share, on a basic and $.02 on a diluted basis for the comparable year-ago quarter. Net loss for the 9 months ended March 31st, 2012 was $1.5 million, or a loss of $.06 per share, compared to net income of $6.4 million, or $.29 per share on a basic and $.27 per share on a diluted basis for the same period last year. Turning to our balance sheet. Total cash and cash equivalents and restricted cash was $12.2 million at the end of the quarter. Total net accounts receivables was $5.8 million at the end of the quarter, compared to $8.2 million at June 30th, 2011. Net deferred revenue was $6.4 million at the end of the quarter, compared to $5.8 million at June 30th, 2011. Looking at our debt obligations, our bank debt was $3.8 million at the end of the quarter, compared to $5 million at June 30th, 2011. Our related party [ph] debt was $5.5 million at the end of the quarter, compared to $5 million at June 30th, 2011. Now turning to our fiscal 2012 updated guidance. At the start of fiscal 2012, based on initial estimates of 65% license and 35% hosting split for fiscal 2012 in bookings, we estimated our revenue growth for fiscal 2012 to be between 22 and 27%. In the first 9 months of fiscal 2012, the booking split has been 51% license and 49% new hosting bookings, and as Ashu mentioned, looking ahead, we are seeing a continued trend toward more hosting deals and estimate that the booking split for fiscal 2012 will be in the range of 45% license and 55% hosting. As a result of this, with our fiscal 2012 second quarter financial results, we revised our estimate for fiscal 2012 revenue growth to be in the range of 5% to 10%. At the same time, we estimate that recurring revenue will improve in the next 2 fiscal years, due to the increased hosting bookings this fiscal year. Note that if this bookings mix were to differ from our current estimate, there will be a corresponding impact on revenue timing. Based upon this updated booking split, we estimate new bookings for new hosting business to increase between 160% and 180% for fiscal 2012, and new licensed bookings to decrease between 25% and 30% for 2012. With this mix shift to more hosting bookings, we now estimate fiscal 2012 new bookings growth to be in the range of 20% to 30%. This decreased from our original guidance of bookings growth in the range of 40% to 50%, and is due in part to the higher economic value of new license and support bookings in the short term, when compared to new hosting bookings, where the economic value increases over time with renewals. This ends management's presentation. We will now open up the call for questions.

[Operator Instructions]. And our first question come from Jon Hickman from Ladenburg Thalmann.

I was -- I have a few questions. First of all, can you help me, Eric, with what was depreciation in the quarter?

Yes, just a second, John.

Okay. And then, did I hear you right about stock-based compensation, $234,000?

It was actually -- the stock-based comp is $255,000.

$255,000. Okay.

There was a recent grant to Ashu, because you know that Ashu doesn?t receive any cash comp and so the board had approved a recent grant. So that -- that's along with the increase in hiring. And certainly had an impact on that number. And then on the depreciation expense, was around $230,000.

Okay, then as you have increased your headcount in your sales -- in your sales group, last -- this quarter, sales and marketing jumped to like 52% of sales. Could you give us some guidance about where you expect that number to kind of go during the next year or so?

John, this is Ashu. I think a good way to look at it for us, which is what we do internally, is to track it as a percentage of the new bookings that we are driving. And we sort of look at the economic value that we are generating from the new bookings against the sales and marketing investment that we are putting in, which to put it very simply, kind of breaks down into 2 buckets. One is the ramped-up investments and the other is new investments which have not yet ramped up. So as long as we are driving the new investment in sales and marketing at the rate we are doing now, I expect that the percentage of what seems like a total sales and marketing investment of revenue is going to be in that high-40, low-50s kind of range. Once we start to see that new sales and marketing bucket as a percentage of total start to taper off, if it does, and so far in the next year we think that we should and will continue to drive the new sales and marketing investment because we're seeing the returns on the other side. So to answer your question in a summary form, I think that we are probably going to operate in that zone of high-40s, low-50s for the foreseeable future, given the opportunity ahead of us.

So you doubled your sales force over the last like -- in fiscal -- well, I guess, in the calendar year basically.

Yes.

What -- so what?s the thinking about adding headcount from here on?

So we haven?t yet shared the fiscal ’13 plans and thinking, but in the near term, we feel that we?ve hired quite a few people now and we have a good organization and there may be some sort of temporary slowdown as we digest this growth on the sales and marketing side, but over the fiscal year ’13, I do think that we will pick it up again.

Okay. So for the foreseeable future, you?re kind of willing to spend aggressively to drive the top line?

Yes. And if you look at the bookings that we are generating from the amount of sales and marketing we're putting in, we think that it's more than in line with what the market you'll see with other comparable businesses at this stage of the growth and this kind of opportunity.

So could you offer some guidance about when you might see -- you said improvement over the next 2 years in your recurring revenue line, when do you think that will start to show up?

We?ll certainly look into that and think about providing more information in that area. But at this time, Eric, do you think we can do anything with that?

I think that we'll probably maybe when we do sort of the reports for the fiscal year and look to fiscal ?13, I think we?ll be in a better position to update on that.

Okay, and then, could you, Eric, or Ashu, could you give us, as your recurring revenue increases, you said that, I think margins from that side of the business hit 77% this quarter. Is that correct?

That?s correct.

So where can that go? Can you get it into the low-to-mid-80s eventually?

Certainly over time, I think that certainly our expectation is we would expect to achieve comparable margins to other businesses, you know, similar to ours out there in the market at the respected levels.

At this time, I show no further questions. [Operator Instructions]. And there do appear to be no further questions so I will turn the call back over to our presenters.

Okay, thank you, operator. Thank you, everyone, again, for joining us on the call today. We believe this is an exciting time for eGain. We continue to build a world-class organization and should you have any further questions or comments, please feel to give us a call or our Investor Relations a call. We look forward to talking to you on the end of the fiscal ?12 results. Thank you.

Ladies and gentlemen, that does conclude the conference for today. Again, thank you for your participation. You may all disconnect. Have a good day.