Good day, and welcome to the eGain Fiscal 2020 Fourth Quarter and Full- Year Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jim Byers of MKR Investor Relations. Please go ahead, sir.
Thank you, operator. Good afternoon, everyone. Welcome to eGain's Fiscal 2020 Fourth Quarter and Full- Year 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 operation 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 in the company's reports filed with the Securities and Exchange Commission.
eGain is making these statements as of today, September 2nd, 2020, 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 discuss certain non-GAAP financial measures, such as non-GAAP operating income. Our earnings press release can be found on the news release link on the investor relations page at eGain's website at www.egain.com. Tables included with the earnings press release include reconciliation of the historical non-GAAP financial measures to the most directly comparable GAAP financial measures. Lastly, a replay of this conference call will also be available at the investor relations section of eGain's website. Now with that said, I'd like to turn the call over to eGain's CEO, Ashu Roy.
Thank you. Hello everyone. We are pleased to report a strong financial performance across the board for our fiscal 2020 fourth quarter and full-year. In summary, our fiscal 2020 full-year performance exceeded our guidance. Our top and bottom line results are ahead of street consensus. We also saw a healthy increase in bookings year-over-year, and we generated strong profits and record cash flow for the year. It's been a good year of business performance. In addition, we exited fourth quarter of fiscal 2020 with our SaaS business revenue, which is the sum of SaaS revenue plus professional services. That SaaS business revenue is now at a little over 90% of our total revenue for the fourth quarter.
As you all know, we had targeted to get to this 90%+ level of SaaS business revenue in the December 2020 quarter, which is two quarters from now, and we have reached that milestone two quarters early, which is good momentum. Turning to the evolving business climate in the ongoing pandemic. Some of our deals, especially new logos that slipped in March, have since closed, while some remain engaged. The spike in business that we saw from customers looking to deflect more phone interactions to digital during the early months of the pandemic has since pulled back a little to a new normal. As I mentioned during the last call, many of our clients successfully handled customer contact surge with our solutions, driving more digital self-service and enabling their contact center workforce with our knowledge and AI solutions.
Several customers have also activated our virtual assistant for conversational automation to reduce pressure on their contact centers. These customers have seen up to 80% deflection in specific contact types, even as customer sat remains high. This is contrary to what we hear from the broader marketplace. As you all may have seen, we recently issued a press release where we had sponsored a comprehensive consumer survey in which chatbots ranked dead last in customer satisfaction across all digital service options. The reason we believe is that our virtual assistant solution is smart and connected to the rest of the channels and to core knowledge and AI for automatically solving customer issues. Interest in our recently announced eGain Messaging Hub with our novel Bring Your Own Bot architecture has been strong. We announced that a couple of months ago.
Specifically, prospects are attracted to our unified approach that harmonizes and connects all the multiple messaging channels, diverse bot technologies, multitude of backend systems, in effect, automating the engagement with a common and proven AI knowledge and analytic capability. Our solution is unique and proven in this regard. Having said that, given the macro uncertainty brought about by the COVID situation, we do anticipate some negative impact in the short- term as investment decisions get delayed and greater scrutiny is placed on renewals. Looking at our business performance in the fourth quarter, we saw healthy new bookings with a mixture of new logos and expansion. Notable deals included a large government organization in the U.S., a leading healthcare insurance in the U.S., a multinational telecom.
We had several large renewals in the quarter, including a U.S. federal agency, a large P&C insurance in the U.S., and a large full-service bank. All in all, a balanced, good booking environment. Turning to our field and our partners, at the beginning of this calendar year, we announced our OEM agreement with Avaya. This was followed by the announcement of general availability of the product in March. Now we are on the go-to-market runway, jointly executing a plan to train the Avaya sales and partner network. We also closed our first deal with Avaya right after the end of the fourth quarter, at the beginning of the current quarter, which is the first quarter of fiscal 2021. Early pipeline growth is encouraging. We expect our Avaya partnership to favorably impact our top line in fiscal 2021.
Speaking of partnerships, we recently welcomed back Mike Taylor, an eGain alum, as our new head of business development, reporting to me, focused on new channel partnerships and building out our developer ecosystem. Mike brings a wealth of relevant experience, most recently at ServiceNow, where he built partnerships with global service providers and SIs. I'm excited to have Mike back on board, and so is he. The time is now for us to rapidly increase our market reach through complementary partnerships. That's what he's focused on building out. Looking ahead to fiscal 2021, we're quite bullish about our business, despite the short-term COVID uncertainty. Our digital platform is increasingly preferred by enterprises looking for smart automation. Automation is not just about digital connection with customers, even though that is a critical first step. It's about smartly solving the problems once connected in as automated a way as possible.
Finally, it's about rapidly optimizing the experience for all stakeholders, associates, business, and customers. We see that connecting, solving, and optimizing all working together lead to customer engagement automation. Forrester Research, in the recent Digital-First Customer Service Wave, rates eGain number one in current product offerings. Gartner, in the recent Critical Capabilities report, rates eGain as the number one digital plus knowledge management provider. Much of what analysts consider vision for tomorrow, we deliver today. Now, with strong business performance in fiscal 2020 and a healthy balance sheet, we are increasing our investment in sales and marketing. Our installed base of 150 SaaS customers presents a significant opportunity to grow, so we're investing in that. On the new logo front, we're investing more in digital marketing and expanded partner support.
Finally, we are aggressively continuing to court our legacy customers to migrate them to the eGain cloud as quickly as possible. The market for our solutions is huge and horizontal. This year, we will strategically focus on three things: customer acquisition, build-out of our partner and developer ecosystem, and continued product innovation. We believe that we can be the leading customer engagement automation company over the next three to five years, the leading customer engagement automation company. This is the goal we are committing to. With that, I'll ask Eric Smit, our Chief Financial Officer, to add more color and around financial operations. Eric?
Great. Thanks, Ashu, thanks, everybody, for joining us today. As Ashu noted, we are pleased to report strong financial performance across the board for our fiscal 2020 fourth quarter and full-year. Let me start by sharing some financial highlights from the quarter and the full-year. We grew our SaaS revenue by 34% for the quarter and 27% for the year compared to the same period a year ago. Our SaaS and professional services revenue, or our SaaS business, grew 30% for the quarter and 22% for the year. Our SaaS business comprised, as Ashu said, 91% of total revenue for the quarter, and again, two quarters ahead of the target that we had set at the beginning of the year to achieve the 90% of revenue by the end of calendar 2020.
Our SaaS net retention rate for the year was at 114%, up from 106% in fiscal 2019. Our GAAP net income was up significantly, 300% for the quarter and up 50% from the year-ago quarter. Our operating cash flow margins were 29% for the quarter and 19% for the year. With the strong cash flow, we ended the year with $47 million in cash and no debt. Looking at our quarterly results in more detail. First, the revenue components. SaaS revenue was $15.5 million or 34% or up 34% year-over-year. Legacy revenue was $1.8 million, down 50% from a year ago, driven by the combined migration of our legacy customers to the cloud and the sunsetting of our legacy non-cloud offering. Professional services revenue was $1.7 million for the quarter, up 3% from Q4 last year, and accounted for 9% of our total revenue in Q4.
Now looking at our non-GAAP gross profits and gross margins. Gross profit for the fourth quarter was $14.1 million or a gross margin of 74%, up from a gross profit of $11.2 million or a gross margin of 67% a year ago. This 700 basis point improvement year-over-year reflects a combination of the benefits we are starting to see in the scale and efficiencies around our cloud operations and the growth in our higher margin SaaS revenue. Our subscription gross margin was 81% in Q4, up from 72% in Q4 last year. Professional services gross margin was 7% in Q4, although down from 15% in Q4 last year, it was up sequentially where we had a negative margin in Q3 of fiscal 2020. Now turning to operations. Non-GAAP operating costs for the fourth quarter came in at $11 million compared to $9.9 million in the year ago quarter.
Our non-GAAP operating income in the fourth quarter was $3.1 million or an operating margin of 16%, compared to an operating margin of 8% in the year-ago quarter. Looking at net income. Non-GAAP net income for the fourth quarter was $2.7 million or $0.09 per share on a basic and $0.08 per share on a diluted basis. This compares to non-GAAP net income of $659,000 or $0.02 per share in the year-ago quarter. GAAP net income for the fourth quarter was $2.2 million or $0.07 per share, compared to GAAP net income of $166,000 or $0.01 per share in the year-ago quarter. Looking at our financial results for fiscal 2020. SaaS revenue was $56.8 million, up 27% year-over-year or up 28% in constant currency and ahead of our guidance.
Our SaaS business was $63.4 million, up 22% year-over-year and comprised 87% of total revenue. Total revenue was $72.7 million, up 8% year-over-year or 9% in constant currency, also ahead of our guidance. Legacy revenue was $9.3 million, down 39% from $15.2 million in fiscal 2019. Professional services revenue was $6.6 million or 9% of total revenue, compared to $7.2 million or 11% of total revenue a year ago. Now looking at our non-GAAP gross profits and gross margins. For fiscal 2020, gross profit was $52.1 million or a gross margin of 72%, compared to a gross profit of $46 million or a gross margin of 68% a year ago. Our subscription gross margin improved to 79% compared to 76% for the prior year. Professional services gross margin was 2% compared to 9% for the prior year. Now turning to operations.
Non-GAAP operating costs for the fiscal 2020 came in at $42.6 million, up 11% from $38 million in the prior fiscal year, reflecting our increased investments in sales and product innovation. Non-GAAP operating income improved to $9.5 million or an operating margin of 13%, compared to $7.6 million or a margin of 11% in the prior fiscal year. Looking at our bottom line. Non-GAAP net income was $9.3 million, or $0.30 per share on a basic and $0.29 per share on a diluted basis. This compares to non-GAAP net income of $6.2 million or $0.22 per share on a basic and $0.21 per share on a diluted basis for fiscal 2019.
GAAP net income was $7.2 million or $0.24 per share on a basic and $0.23 on a diluted basis, compared to GAAP net income of $4.2 million or $0.15 per share on a basic and $0.14 per share on a diluted basis for fiscal 2019. Turning to our balance sheet and cash flows. Total cash and cash equivalents as of June 30th, 2020 was $46.6 million, compared to $31.9 million at June 30th, 2019. During the year, we generated record cash flow from operations of $14.1 million, a 100% increase from $7 million in fiscal 2019. That translates into an operating cash flow margin of 19%, up from a 10% margin in fiscal 2019. Now on to our guidance.
Given the investments we are continuing to make in our business to drive growth, as well as the continued level of uncertainty around the COVID-19 pandemic and its impact on the current business environment, we are electing to only provide quarterly guidance for the time being. We will revisit this as the year progresses. For the fiscal 2021 first quarter ended September 30th, 2020, we expect SaaS revenue of between $15.5 million-$16 million, which would represent between 25%-29% growth year-over-year. SaaS and professional services revenue of between $17 million and $17.6 million, which would represent growth of between 21% and 25% year-over-year. Total revenue of $18.6 million-$19.3 million, which would represent growth between 8% and 12% year-over-year.
GAAP net income of $1.1 million-$2.1 million, or $0.03-$0.06 per diluted share, and non-GAAP net income of $1.6 million-$2.6 million, or $0.05-$0.08 per diluted share. We are assuming a diluted share count of 31.9 million for this first fiscal quarter. Before closing, just a couple of investor relations updates. We will be participating in two virtual investor conferences later this month. Next week, we will be participating in the D.A. Davidson Software and Internet Virtual Conference on September 9th. We will also be participating in the Jefferies Software Virtual Conference on September 15th. We hope to see some of you virtually at these conferences. This concludes our prepared remarks. Operator, we will now open the call for questions.
Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. We'll take our first question from Ryan MacDonald with Needham & Company.
Yes, good afternoon, Ashu and Eric. Thanks for taking my questions, and congrats on a great quarter. Ashu, I guess the first for you. We're obviously now getting into the final months of the first quarter here. Would just love to hear what you're hearing from your customer conversations, what you're seeing from a pipeline perspective, as we look out for fiscal 2021, and I guess, maybe some of the moving parts that make you cautious, I guess, still on providing that full-year outlook.
Yeah, sure thing, Ryan. What we are seeing is the engagement level in these conversations and deals is high. People are working, interacting closely, progressing the opportunities. The part that we want to make sure of, and that's the nervousness that all of us have, is whether the decisions and the signatures can be done on time, because classically, even in the past world, in the enterprise, as we all know, deals are signed toward the end of quarters mostly, unless they slip from one to the next. That's the part that we're still kind of watching closely. Other than that, the engagement level is high. That gives us comfort there.
That's helpful. I guess as we've seen this shift in work from home and adoption of alternative channels for customer interaction, can you talk about how that's been framing the conversations you're having with prospective customers around things like the Messaging Hub and the virtual assistant?
I think the part which is the two trends which have accelerated, and again, no surprise, but it does affect us positively in our business. One is just more digital, and that we are seeing the Messaging Hub pull in that regard. More migration into digital, more investment into digital. The second thing we are seeing is more knowledge and guidance requirements, either for self-service automation as well as for agent supports. In the agent side, we are seeing an interesting thing where, because of the dislocation workforce, a lot of these agents are now working from home, some from different offices. They are not quite in a position where they can just ask their coworkers when they have a question. Access to knowledge systems and guidance systems, we are seeing more interest because of that as well.
Excellent. Just one last follow-up for me. You talked for this fiscal year, sort of the strategic focus on customer acquisition and building out that partner developer ecosystem. Can you talk about the magnitude you're expecting in terms of sales headcount additions there, and then perhaps what types of partners you're looking for to add and to continue to build out that ecosystem? Thanks.
Sure. There are two areas where we are investing on the partner side. One is existing partners, which all of those partner team members are part of Taj's organization, who runs our worldwide sales. We're increasing investment in that area. The second area is Mike's, which is a new area, where he's building out a team to begin with probably, I would say, three to four people. The areas we're going to be targeting, which we're already working on, are some of the CRM and the help desk ecosystem to see how we can get into complementary partnerships in those areas. We have certified integrations, but the question is, can we develop more mutually beneficial go-to-market strategies in those partnerships?
The other area is System Integrators and global service providers. Those are the areas that we're looking to expand into from a partner standpoint.
Excellent. Thanks a lot.
Thank you.
Thank you. We'll take our next question from Koji Ikeda with Oppenheimer.
Great. Thanks for taking my questions. Congrats on the nice quarter. I had a question on billings and deferred revenue. Granted, both metrics have been a little bit all over the place over the past several quarters, especially with the runoff in maintenance revenue, but I noticed this quarter was particularly strong. I guess, what are some of the puts and takes there that were driving the billings and deferred revenue strength? Was there any changes to contract durations or seasonality that we should be thinking about or any true ups from previous customer relief programs? I mean, is there any of that going on there or is it really just good execution in the fourth quarter?
Thanks, Koji. Yeah, I think there's probably a combination of those items. Certainly, there's the good execution. I think the bookings were good. As we've stated on previous calls, just sort of given the nature of our business and the timing of renewals and the sort of still the relative lumpiness of when the timing of the bigger deals occurring, that this metric does tend to sort of move across as opposed to having some consistent movement. Obviously we're pleased to see the positive movement this quarter, but again, I think it's probably a combination of those factors is what's driving it.
Okay. Thanks, Eric. Maybe a follow-up for you or Ashu, just thinking about the operating margin in the quarter, really great operating margin there. I think it's the most you've had in a really long time, definitely as far as our model goes back. The guidance for the fiscal first quarter implies it should be coming down a bit from where it ended up in the fiscal fourth quarter. How should we be thinking about any incremental investments or upside that we saw in the fourth quarter being reinvested in the business in the first quarter? Is there anything seasonal in the first quarter in terms of expense side that we should be thinking about?
Eric, you want to start with and I can add to that?
Yeah. Sounds good. Thanks, Ashu. I think sort of one point worth noting just from a seasonal timing standpoint is we do see as we kick off the fiscal year, there's an element of finalizing the budgets and sort of locking in the headcounts. Ashu can talk a little bit to it, but we actually, as we've talked about, our plans are to ramp investments to gain more market share. I think the execution around continuing to bring those people on is something that certainly plays into it. I think from a seasonal standpoint, we are still, I mean, not specifically seasonal, but I think as a business, we're still adjusting to the new operations where we had scheduled to have on physical events from a marketing side. There was clearly money saved from those on-premise events that didn't happen.
I think now what we're adjusting to though, is increasing the digital spend and looking at other ways to increase that spend. I think it's a matter of as we transition into this new way of doing business and increasing the headcount is what we're looking to drive that increased investment. Maybe Ashu can add a little more color to that.
Sure. Yeah. Everything you said, Eric, that's correct. Koji, from our standpoint, the headcount increase, investments in the areas we mentioned, that is underway. The marketing bit that Eric mentioned, he's right in the fourth quarter fiscal 2020, because we did not hold this big event. We do one in U.S. and one in U.K. We did not do the one which normally gets done in the U.K. in the calendar Q2. That kind of saved some money, but you'll see that digital marketing spend is going to be up as an overall sort of marketing bucket in Q1 fiscal and beyond. I think that overall, that sales and marketing investments will be up in Q1 and then on in Q2 as well.
Got it. Thanks for the color. Appreciate it. One last one from me, I'll jump back in the queue. About $1.8 million-ish of legacy maintenance revenue sitting here. I guess it's well ahead of the target for the end of calendar 2020. Where do you see legacy maintenance revenues stabilizing as we kind of think about the end of calendar 2020? How should we be thinking about any runoff from there within that legacy maintenance revenue line item? Thanks for taking my question, guys.
I'll go first here, Eric, and just kind of give my sense and I think we haven't nailed it down on a public basis to say where we want it to be, but I would like to see that percentage be in the 5% area by the end of fiscal 2020. That would be my hope, and that's what we are kind of gunning toward. Eric, do you have any targets in mind at this point or?
Well, I think just to clarify fiscal 2021, right, Ashu?
2021, I'm sorry. I apologize.
Yeah. Basically a year from now. Yeah. I mean, I think.
Yes
I think just to add to that, I think now that we've sort of got past this milestone that we had set. I think we're continuing to be more aggressive in encouraging the remaining customers and really looking at opportunities that we can to drive them over. I think in the early days when we began the transition, we were very sensitive and working closely with customers more on their terms. As we get down to the final stages, I think we can be more aggressive in our approach towards moving these final customers. Hopefully, to Ashu's point, we can get that closer to that 5% range by the end of the fiscal 2021.
Got it. Thanks, everyone. Thanks for taking my questions.
Thank you. We'll take our next question from Richard Baldry with Roth Capital Partners.
Thanks. Kind of getting back into the booking side again, can you talk about the linearity you saw through the quarter? Deferred rev up $10 million sequentially, which looks like a pretty strong number. Sort of curious how that played out throughout. Was it pretty tough in the early months and then kind of picked up pace? Was it more linear than I would have expected, maybe?
It was definitely more linear as quarters go. We definitely saw some deals close earlier in the quarter as opposed to it being completely backloaded, which is more often the case.
And maybe talk about-
I think also just to add to that, Rich. Sorry, Rich, just one more thing. It's not so much that that's the pattern in every quarter, but just the fact that we have been cooking some of these large deals through the fiscal year, and that's what resulted in the steady linearity that Eric is referring to.
Okay. Yeah. Maybe building off of that, how about aside from the first Avaya deal you talked about that closed early this quarter, maybe how has the trend continued early in the first quarter versus last quarter?
I would say that we are in the usual quarter pattern, which is you do get some business in the first half, but you get more business in the second half of the quarter. That's our pattern. Q4 was an aberration, and Eric rightly pointed that out. That's how we see it right now.
Okay. In terms of absolute dollars, the recurring cost of goods actually fell sequentially while the revenues keep climbing. Is there anything unusual in there or one-time oriented in there, some reversal or something? You talked about efficiency, but seeing the dollar fall is not necessarily something we usually count on. How do we think about that on a run rate maybe, or go forward?
Eric, you want to take that?
Sure. I think that what we've seen is, I think the team is doing a good job in working with the platform providers. Continuing to find ways to sort of drive that average cost of SaaS revenue down when it comes down to that direct cost. That really was a big element. I think we saw some renegotiation of some contracts where we saw a pickup. There may have been some catch-up in the previous quarter that contributed to the decline, but it wasn't as if there was anything out of line in this particular quarter that drove a lower number.
I agree. I think the combination of those two factors here, Rich. One is the continuing automation and efficiency gain. As you know, since our architecture of the new cloud that we have had for the last several years is it uses AWS and Azure as the infrastructure as a service. We keep optimizing that in terms of how we use those resources. That's the first one, and that efficiency gain kind of helps us. The second one, I do think there were some catch-up items there, just end of year in terms of contract negotiations, which helped as well.
Last would be, if we have sort of a general view that cloud-based communication is going to pick up in demand side, especially as people's bandwidth sort of clears from the earliest headwinds from COVID, how do you feel about sort of your direct sale headcount, and this transition to virtual selling, sort of the capacity or efficiencies you've got so far? Can you keep up to it if the demand side accelerates like a lot of people think? Thanks.
That's a good question. I mean, we are expanding our direct sales team, although it's an overlay model, so it's more of an enterprise sales team, and hardly a field element there right now. It's all virtual, as you said. The seniority and the kind of domain expertise we certainly see as enterprise. We are increasing our investment in that area. Whether we have the capacity to fulfill, I think we are hiring quite aggressively. We believe we will have the capacity, but we'll see how things evolve as we get more and more demand generated, both from direct and from our partners.
Thanks.
You're welcome.
Thank you. We'll take our next question from Jeff Van Rhee with Craig-Hallum.
Great, thanks for taking my questions. A few from me. I think just going back, I think when we started FY 2020, the original modeling outlook was 30-32 on S&M, 24-26 in R&D. As you look at FY 2021, I realize you don't want to get into the annuals because you're more concerned on the revenue flow. Conceptually, kind of that aggression to get you into those ranges, has that mindset changed at all? Again, I realize COVID has changed things a bit on the revenue side, but if that abates here, is that thinking still intact?
Yeah, absolutely. I think if anything, just given the way that the market is accelerating to us, we're looking at obviously prudently doing so, but continuing to ramp that spend to really capitalize on the opportunity. I think given the strong cash flow and the balance sheet position that puts us in, I think that just gives us further confidence in working towards ramping those investments.
Those ranges wouldn't be off the table, all else the same, if the market bears out the way you think it is?
That's right.
From a usage, I realize model's not primarily a usage-based model. Certainly saw spikes and surges in a lot of different kinds of digital channels and consumptions. To be clear, any notable revenue impact from usage related streams?
There was, I think, definitely not as much as the previous quarter, but it's an area that we were obviously still seeing the uptick from many of our customers that saw a spike in their own interactions, more so in the early part of the quarter. I don't have the exact amount, but there was definitely an element of some overage seasonality, if you will, driven by the environment. That I would say has sort of tapered off some now.
Got it. Along the lines of the pipeline, at this point, if you kind of dissect that pipeline a little more precisely, what's changed with respect to two aspects, new versus existing type prospects, and then also the use cases you're seeing really drive the pipe?
This is actually for Jeff. Yeah, two comments. One is, we are seeing more in our pipeline over the last, let's say, three to four months, more new logos in the pipeline. A lot of it is driven by the new partner channel, which is good. The second piece around whether we are seeing particular areas of demand, like I said, one is the messaging area. Messaging and virtual assistance sort of go hand in hand. It is more around digital connectivity and automation and self-service. We are seeing that as one bucket of demand that continues to be strong. The second area we see increased and sustained demand now is knowledge and AI in contact centers. Agent-facing knowledge, we are seeing more sustained increase on incoming interest on that.
Sounds good. Appreciate it.
Sure.
Thank you. We'll take our next question from Mark Schappell with Benchmark.
Hi. Thank you for taking my question, and congratulations on the quarter. Building on an earlier question with respect to your sales capacity, could you just discuss your plans for adding new quota carriers during the coming fiscal year, what we can expect as far as numbers?
We haven't quite talked about the numbers in terms of head count, but what we are, and we are doing this so we can share with you, which is as a percentage of our revenue, we are kind of ramping our sales and marketing investment to the 35% level. Whether we get there in six months or we get there in 12 months, that's something we'll have to monitor quarterly because of the nature of where we are in the economy. That's kind of where we want to take it to, subject to obviously bringing in the cohorts and making sure that they are being able to deliver to early milestones.
Great. Ash, with respect to the Avaya partner deal that was signed early in fiscal Q1, I was wondering if you could just give a few details about how that deal kind of developed and came together.
Sure. It happens to be a large BPO client of Avaya. They had been trying out some other solutions. Once this Avaya branded solution, which is the eGain solution, but Avaya branded OEM, was launched. As you know, the general availability was in March. We closed the deal in mid-July, so not a very long sales cycle. That happened to just be the situation where they needed to get into some client of theirs where they needed to deliver digital capability. It wasn't really a competitive environment. To us, it's a start. What we are seeing is there's a lot of pent-up demand in the Avaya install base, particularly around the elite customers.
As you know, Avaya, while there's challenges around the Avaya customer base in terms of other new age competitors, there's also a lot of reliability and confidence in the Avaya install base to look at Avaya solutions if they make sense. We feel like it's a good fit between our solution, and it can be deployed extremely quickly because it's a cloud-based solution, which is what we have done. For this client, they're just going live imminently now. You're talking about a six-week deployment cycle. All in all, looking encouraging. Based on that small early deal, because it's a large BPO, we do expect that there'll be more expansion.
Great. Thank you.
Thank you. As a final reminder, if you would like to ask a question, please press star one now. At this time, I show no questions in queue. I'd like to turn it back to eGain management for closing remarks.
Great. Well, thanks everybody. I appreciate you taking the time to listen, and we look forward to updating you when we put out our Q1 results. Again, hopefully may get an opportunity to chat with some of you at the upcoming virtual investor events that we're at later this month. Thank you.
This concludes today's call. Thank you for your participation. You may now disconnect.