MOUNTAIN VIEW, CA--(Marketwire - February 5, 2009) -

Quarter Highlights

--  Revenue of $9.6 million up 18% from the comparable year-ago quarter
--  Record net income of $2.0 million compared to a net loss of $432,000
    in the comparable year-ago quarter
    

eGain Communications Corporation (OTCBB: EGAN), a leading provider of customer service and contact center software, today announced financial results for the second fiscal quarter ended December 31, 2008.

Total revenue for the second quarter of fiscal year 2009 was $9.6 million, an increase of 18% from the comparable year-ago quarter. License revenue was $3.5 million, an increase of 61% from the comparable year-ago quarter. Support and services revenue was $6.1 million, an increase of 2% from the comparable year-ago quarter.

Gross margin for the second quarter of fiscal year 2009 was 73% compared to 64% in the comparable year-ago quarter. Total operating costs and expenses for the second quarter of fiscal year 2009 were $5.1 million, a decrease of 2% from the comparable year-ago quarter.

Net income for the second quarter of fiscal year 2009 was $2.0 million, or $0.09 per share on a basic and diluted basis, compared to a net loss of $432,000, or $(0.03) per share, for the comparable year-ago quarter. Net income for the quarter included stock-based compensation of $89,000 and interest and tax expense of $239,000, compared to stock-based compensation expense of $74,000 and interest and tax expense of $392,000 for the comparable year-ago quarter.

Total cash and cash equivalents were $3.8 million on December 31, 2008, compared to $2.2 million on September 30, 2008. Days sales outstanding in receivables for the quarter ended December 31, 2008 were 52 days, compared to 40 days for the comparable year-ago quarter. Deferred revenues totaled $5.3 million at December 31, 2008, up from $4.6 million at September 30, 2008.

"We enjoyed strong bookings and reported record net income this quarter," said Ashu Roy, eGain Chief Executive Officer. "We also released eGain Service 8 -- the latest version of our unified Customer Interaction Hub suite."

Business Highlights

--  New hosting and license bookings(1) for the second quarter of fiscal
    year 2009 were $4.5 million, an increase of 47% from the comparable year-
    ago quarter. Of the total new hosting and license bookings in the second
    quarter of fiscal year 2009, 15% was from new hosting bookings and 85% was
    from new license bookings, compared to 18% new hosting bookings and 82% new
    license bookings in the comparable year-ago quarter.
--  We released findings of our "state of customer service" research
    focused on communications and retail sectors. The study included a holistic
    measurement of single-channel and cross-channel customer service offered by
    leading North American companies in these sectors and furthers our belief
    that there is a need for eGain's solution for unified, multichannel
    customer service.
--  eGain was included in the "Software 500" list for the sixth year in a
    row. The "Software 500" is a revenue-based ranking of the world's largest
    software and service providers.
--  Our client, Replacements, Ltd., was selected as a finalist for the
    2008 Stevie Awards. Replacements, Ltd. received accolades in the Best Use
    of Technology in Customer Service category for its implementation and
    business value creation which used eGain's solution for customer service
    management.
    

Market and Business Outlook

Given the macroeconomic slowdown, we are continuing our focus on specific, well-developed opportunities, while closely managing our costs and expenses.

We are continuing to invest in our Cisco OEM partnership to expand our global market reach. Also, we continue to invest in developing our partner ecosystem which is showing positive results outside the U.S.

As a result of these targeted investments, we expect to grow our business steadily in this challenging environment by targeting global enterprise clients who trust eGain as a long-term supplier of top-rated, innovative customer interaction hub solutions. However, given the recent foreign currency fluctuations, we are unsure what impact the volatility of the U.K. pound and the Euro against the US dollar will have on our revenues and bookings in the remainder of fiscal year 2009.

(1) We define New Hosting and License Bookings as new contractual commitments (excluding renewals) received by the company for the purchase of product licenses and hosting services. Such contracts are not cancelable for convenience but may be subject to termination by our customers for cause or breach of contract by us. Furthermore, because we offer a hybrid delivery model, the mix of new license and hosting business in a quarter could also have an impact on our revenue in a particular quarter. Due to effects that these trends have on our short-term revenue and profitability, we believe that it is useful to disclose New Hosting and License Bookings detail in this and future financial releases. We use this metric internally to focus management on the productivity of the sales team and period-to-period changes in our core business. Therefore, we believe that this information is meaningful and helpful in allowing individuals to better assess the ongoing nature of our core operations.

About eGain Communications Corporation

eGain (OTCBB: EGAN) is a leading provider of multichannel customer service and knowledge management software for in-house or on-demand SaaS deployment. For more than a decade, several of the world's largest companies have relied on eGain to transform their traditional call centers, help desks, and web customer service operations into multichannel customer interaction hubs. Based on the Power of One™, the concept of one unified platform for multichannel customer interaction and knowledge management, these hubs enable dramatically improved customer experience, contact center agent productivity, service process efficiencies, sales, and overall contact center performance. To find out more about eGain, visit www.eGain.com or call the company's offices: 800-821-4358 (US headquarters), 1753-464646 (UK and Continental Europe).

Cautionary Note Regarding Forward-looking Statements

All statements in this release that involve eGain's plans, forecasts (including the above stated guidance), beliefs, projections, expectations, strategies and intentions, including but not limited to our plan to focus on well-developed opportunities this year, our Cisco OEM partnership, our investment in global customer care infrastructure, our projected growth and our targeted customer growth, our management of costs and expenses, and the mix of our business on our revenues 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 release, 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; the actual mix in new business between hosting and license transactions when compared with management's projections; volatility of the value of certain currencies in relation to the US dollar, particularly the U.K. pound, Indian rupee and Euro; the increased complexity of certain transactions and the timing of revenue recognition on such transactions; and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission, including the Company's annual report on Form 10-K filed on September 29, 2008, and the Company's quarterly reports on Form 10-Q. eGain assumes no obligation to update these forward-looking statements.

Note: eGain is a registered trademark, and the other eGain product and service names appearing in this release are trademarks or service marks, of eGain Communications Corporation. All other company names and products are trademarks or registered trademarks of their respective companies.

                     eGain Communications Corporation
                  Condensed Consolidated Balance Sheets
                              (in thousands)
                                (unaudited)



                                                  December 31,   June 30,
                                                     2008         2008
                                                  -----------  -----------

ASSETS

Current assets:
  Cash and cash equivalents                       $     3,805  $     3,790
  Restricted cash                                          13           13
  Accounts receivable, net                              5,540        2,749
  Prepaid and other current assets                        461          818
                                                  -----------  -----------
    Total current assets                                9,819        7,370

Property and equipment, net                               928        1,230
Goodwill, net                                           4,880        4,880
Other assets                                              388          434
                                                  -----------  -----------
    Total assets                                  $    16,015  $    13,914
                                                  ===========  ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                $     1,009  $     1,669
  Accrued compensation                                  2,335        1,712
  Accrued liabilities                                   1,412        1,632
  Deferred revenue                                      5,034        4,871
  Current portion of capital lease obligation              38           52
  Current portion of bank borrowings                      121          100
                                                  -----------  -----------
    Total current liabilities                           9,949       10,036

Deferred revenue, net of current portion                  296          293
Capital lease obligation, net of current portion           35           78
Related party notes payable                             7,185       13,283
Bank borrowings, net of current portion                 3,178        3,192
Other long term liabilities                               265          321
                                                  -----------  -----------
    Total liabilities                                  20,908       27,203

Stockholders' deficit:
  Common stock                                    $        22  $        15
  Additional paid-in capital                          323,481      316,527
  Notes receivable from stockholders                      (75)         (74)
  Accumulated other comprehensive loss                   (505)        (494)
  Accumulated deficit                                (327,816)    (329,263)
                                                  -----------  -----------
    Total stockholders' deficit                   $    (4,893) $   (13,289)
                                                  -----------  -----------
                                                  $    16,015  $    13,914
                                                  ===========  ===========





                     eGain Communications Corporation
              Condensed Consolidated Statements of Operations
                 (in thousands, except per share amounts)
                                (unaudited)


                                    Three Months Ended   Six months ended
                                       December 31,        December 31,
                                    ------------------  ------------------
                                      2008      2007      2008      2007
                                    --------  --------  --------  --------

Revenue:
  License                           $  3,529  $  2,192  $  5,128  $  3,615
  Support and Services                 6,060     5,933    12,600    10,981
                                    --------  --------  --------  --------
    Total revenue                      9,589     8,125    17,728    14,596
  Cost of license                         19        20        38        40
  Cost of support and services         2,579     2,920     5,420     5,595
                                    --------  --------  --------  --------
    Gross profit                       6,991     5,185    12,270     8,961

Operating costs and expenses:
  Research and development             1,400     1,255     2,925     2,399
  Sales and marketing                  2,851     3,000     5,633     6,141
  General and administrative             873       963     1,920     2,386
                                    --------  --------  --------  --------
    Total operating costs and
     expenses                          5,124     5,218    10,478    10,926
                                    --------  --------  --------  --------
Income / (Loss) from operations        1,867       (33)    1,792    (1,965)
Interest expense, net                   (335)     (402)     (820)     (806)
Other income (expense), net              341        (7)      365        35
                                    --------  --------  --------  --------
Income / (Loss) before income tax      1,873      (442)    1,337    (2,736)
Income tax benefit / (expense), net       96        10       110       (96)
                                    --------  --------  --------  --------
Net Income / (loss)                 $  1,969  $   (432) $  1,447  $ (2,832)
                                    ========  ========  ========  ========

Per share information:

  Basic net income / (loss) per
   common share                     $   0.09  $  (0.03) $   0.08  $  (0.18)
                                    ========  ========  ========  ========
  Diluted net income / (loss) per
   common share                     $   0.09  $  (0.03) $   0.08  $  (0.18)
                                    ========  ========  ========  ========

  Weighted average shares used in
   computing basic
    net income / (loss) per common
     share                            22,213    15,332    19,035    15,328
                                    ========  ========  ========  ========
  Weighted average shares used in
   computing diluted
    net income / (loss) per common
     share                            22,213    15,332    19,035    15,328
                                    ========  ========  ========  ========