E2open Announces Fiscal 2025 First Quarter Financial Results
E2open Parent Holdings, Inc. (NYSE: ETWO) (“e2open” or the “Company”), the connected supply chain SaaS platform with the largest multi-enterprise network, today announced financial results for...
GAAP subscription revenue of $131.4 million within Q1 FY25 guidance range
Strong cash flow generation in Q1 FY25
AUSTIN, Texas: E2open Parent Holdings, Inc. (NYSE: ETWO) (“e2open” or the “Company”), the connected supply chain SaaS platform with the largest multi-enterprise network, today announced financial results for its fiscal first quarter ended May 31, 2024.
“During the fiscal first quarter, e2open continued to make progress on our multi-quarter plan to return to strong, sustainable organic growth,” said Andrew Appel, e2open chief executive officer. “We have successfully put in place a disciplined operational cadence and a client-centric mindset designed to restore retention to our normal historical levels. Due to our proactive approach, we are on track for material improvements in retention metrics through the end of FY25. We are prioritizing and investing in e2open’s most important asset – our client relationships – and in Q1, this enabled us to improve client satisfaction and secure long-term contract extensions to support future growth. We closed important new subscription business in Q1, and although we experienced some temporary deal closure delays, we have already closed a number of those delayed deals in June. We remain confident in our strong market position and are moving forward aggressively with our client-focused growth re-acceleration plan.”
“In Q1 FY25, e2open delivered subscription revenue at the mid-point of our guidance,” said Marje Armstrong, chief financial officer of e2open. “Adjusted EBITDA margins remained strong and our Q1 cash generation was very robust. Our sound underlying business fundamentals provide important support for the changes we are making to improve client retention, sales execution, and implementation excellence. Gaining traction with these changes, we remain well positioned to build booking and revenue momentum as we move through the fiscal year.”
Armstrong also noted continued engagement in the strategic review that e2open announced in March, anticipating its completion in the near future. “We look forward to being able to share the outcome of the review with our customers, employees, and shareholders as soon as appropriate.”
Fiscal First Quarter 2025 Financial Highlights
- Revenue
- GAAP subscription revenue for the first quarter of 2025 was $131.4 million, a decrease of 2.6% from the year-ago comparable period and 86.9% of total revenue.
- Total GAAP revenue for the first quarter of 2025 was $151.2 million, a decrease of 5.6% from the year-ago comparable period.
- GAAP gross profit for the first quarter of 2025 was $72.7 million, a decrease of 8.5% from the year-ago comparable period. Non-GAAP gross profit was $102.6 million, down 7.1%.
- GAAP gross margin for the first quarter of 2025 was 48.1% compared to 49.6% from the year-ago comparable period. Non-GAAP gross margin was 67.8% compared to 69.0% from the comparable year-ago period.
- GAAP Net loss for the first quarter of 2025 was $42.8 million compared to $360.9 million from the year-ago comparable period. Adjusted EBITDA for the first quarter of 2025 was $50.7 million, a decrease of 5.7% from the year-ago comparable period. Adjusted EBITDA margin was 33.6% consistent with the comparable year-ago period.
- GAAP EPS for the first quarter of 2025 was a loss of $0.13. Adjusted EPS for the first quarter of 2025 was $0.04.
Recent Business Highlights
- Selected by one of the world’s largest retailers in a new logo win for e2open, to provide a global trade program with customs filing and trade automation solutions in multiple countries to support their business priorities.
- Expanded business with several major clients including a large, multi-year renewal with a global technology manufacturer, and a top multinational manufacturer in the automotive industry that selected e2open’s Supplier Network Discovery solution to address regulatory compliance and supply assurance risk.
- Launched Supply Network Discovery, a new solution that helps clients meet regulatory compliance requirements and strengthen their supply assurance with capabilities to discover, map, trace, and assess multiple tiers of suppliers. The e2open Supply Network Discovery application and its supply collaboration platform help brand owners and their supply partners share the strategic information necessary to get components, raw materials, and products where they are needed most and avoid risk of disruptions.
- Released quarterly product update 24.2, including the launch of Supply Network Discovery plus enhancements across the platform including: updates to customs filing capabilities supporting modernization initiatives for the US 21st Century Customs Framework (21CCF), the United Kingdom Customs Declaration System, Germany ATLAS, Netherlands AES, Italy NCTS and the EU’s ICS2 Import Control System; sustainability calculation tools to support tariff due diligence and decision-making considerations to reduce carbon footprint; upgraded capabilities for shippers to view and take action on electronic bills of lading via e2open’s ocean booking platform.
- Recognized customers and partners at annual award program during international customer conference for supply chain innovations and transformations that accelerate their business outcomes, including: JLR for Connected Supply Chain; Sanofi for Supply Chain Innovator; RS Group for Supply Chain Visibility; Goikid Consulting for Connected Supply Chain Partner; and Shippeo for Supply Chain Alliance Partner.
- Achieved interoperability certification on Catena-X, an open data ecosystem for the automotive industry to support multi-tier supplier collaboration. E2open is the first supply chain software provider to be certified outside of founding Catena-X members.
Financial Outlook for Fiscal Year 2025
As of July 10, 2024, e2open is reiterating full year 2025 guidance previously provided on April 29, 2024, and providing second quarter 2025 guidance as follows:
Fiscal 2025 and Second Quarter GAAP Subscription Revenue
- GAAP subscription revenue for fiscal 2025 is expected to be in the range of $532 million to $542 million, reflecting flat growth year over year at the mid-point.
- GAAP subscription revenue for the fiscal second quarter of 2025 is expected to be in the range of $129 million to $132 million, reflecting a negative 3.1% organic growth rate at the mid-point.
Fiscal 2025 Total GAAP Revenue
- Total GAAP revenue for fiscal 2025 is expected to be in the range of $630 million to $645 million, reflecting a 0.5% organic growth rate at the mid-point.
Fiscal 2025 Non-GAAP Gross Profit Margin
- Non-GAAP gross profit margin for fiscal 2025 is expected to be in the range of 68% to 70%.
Fiscal 2025 Adjusted EBITDA
- Adjusted EBITDA for fiscal 2025 is expected to be in the range of $215 million to $225 million, reflecting an implied adjusted EBITDA margin in the range of 34% to 35%.
Quarterly Conference Call
E2open will host a conference call today at 5:00 p.m. ET to review fiscal first quarter 2025 financial results, in addition to discussing the Company’s outlook for the full fiscal year 2025. To access this call, dial 888-506-0062 (domestic) or 973-528-0011 (international). The conference ID is 721473. A live webcast of the conference call will be accessible in the “Investor Relations” section of e2open’s website at www.e2open.com. A replay of this conference call can also be accessed through July 24, 2024, at 877-481-4010 (domestic) or 919-882-2331 (international). The replay passcode is 50762. An archived webcast of this conference call will also be available after the completion of the call in the “Investor Relations” section of the Company’s website at www.e2open.com.
About e2open
E2open is the connected supply chain software platform that enables the world’s largest companies to transform the way they make, move, and sell goods and services. With the broadest cloud-native global platform purpose-built for modern supply chains, e2open connects more than 480,000 manufacturing, logistics, channel, and distribution partners as one multi-enterprise network tracking over 16 billion transactions annually. Our SaaS platform anticipates disruptions and opportunities to help companies improve efficiency, reduce waste, and operate sustainably. Moving as one.™ Learn More: www.e2open.com.
E2open and “Moving as one.” are the registered trademarks of E2open, LLC. All other trademarks, registered trademarks and service marks are the property of their respective owners.
Non-GAAP Financial Measures
This press release includes certain financial measures not presented in accordance with generally accepted accounting principles (“GAAP”) including non-GAAP revenue, non-GAAP subscription revenue, non-GAAP professional services and other revenue, adjusted EBITDA, adjusted EBITDA margin, non-GAAP gross profit, non-GAAP net income, non-GAAP gross margin, adjusted free cash flow and adjusted earnings per share. These non-GAAP financial measures are not a measure of financial performance in accordance with GAAP and may exclude items that are significant in understanding and assessing the Company’s financial results. Therefore, these measures should not be considered in isolation or as an alternative to net income, cash flows from operations or other measures of profitability, liquidity, or performance under GAAP. You should be aware that the Company’s presentation of these measures may not be comparable to similarly titled measures used by other companies.
The Company believes this non-GAAP measure of financial results provides useful information to management and investors regarding certain financial and business trends relating to the Company’s financial condition and results of operations. The Company believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends in comparing the Company’s financial measures with other similar companies, many of which present similar non-GAAP financial measures to investors. These non-GAAP financial measures are subject to inherent limitations as they reflect the exercise of judgments by management about which expense and income are excluded or included in determining these non-GAAP financial measures.
NOTE: E2open is unable to quantify certain amounts that would be required to be included in the most directly comparable GAAP financial measures for non-GAAP gross profit margin or adjusted EBITDA without unreasonable effort, and therefore no reconciliation of certain forward-looking non-GAAP financial measures for non-GAAP gross profit margin or adjusted EBITDA is included.
Safe Harbor Statement
Certain statements in this press release are "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created thereby. These statements relate to future events or the Company's future financial performance and involve known and unknown risks, uncertainties and other factors that may cause the actual results, levels of activity, performance or achievements of the Company or its industry to be materially different from those expressed or implied by any forward-looking statements. In particular, statements about the Company's expectations, beliefs, plans, objectives, assumptions, future events or future performance contained in this press release are forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as "may," "will," "could," "would," "should," "expect," "plan," "anticipate," "intend," "believe," "estimate," "predict," "potential," "outlook," "guidance" or the negative of those terms or other comparable terminology.
Please see the Company's documents filed or to be filed with the Securities and Exchange Commission, including the annual report filed on Form 10-K, and any amendments thereto for a discussion of certain important risk factors that relate to forward-looking statements contained in this press release. The Company has based these forward-looking statements on its current expectations, assumptions, estimates and projections. While the Company believes these expectations, assumptions, estimates, and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond the Company's control. These and other important factors may cause actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. Any forward-looking statements are made only as of the date hereof, and unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
E2OPEN PARENT HOLDINGS, INC | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
(Unaudited) | ||||||||
Three Months Ended May 31, | ||||||||
(In thousands, except per share amounts) | 2024 | 2023 | ||||||
Revenue | ||||||||
Subscriptions | $ | 131,404 |
| $ | 134,903 |
| ||
Professional services and other |
| 19,759 |
|
| 25,217 |
| ||
Total revenue |
| 151,163 |
|
| 160,120 |
| ||
Cost of Revenue | ||||||||
Subscriptions |
| 37,099 |
|
| 36,544 |
| ||
Professional services and other |
| 16,752 |
|
| 19,528 |
| ||
Amortization of acquired intangible assets |
| 24,652 |
|
| 24,630 |
| ||
Total cost of revenue |
| 78,503 |
|
| 80,702 |
| ||
Gross Profit |
| 72,660 |
|
| 79,418 |
| ||
Operating Expenses | ||||||||
Research and development |
| 24,797 |
|
| 25,866 |
| ||
Sales and marketing |
| 20,996 |
|
| 19,558 |
| ||
General and administrative |
| 23,343 |
|
| 22,125 |
| ||
Acquisition-related expenses |
| 283 |
|
| 389 |
| ||
Amortization of acquired intangible assets |
| 20,086 |
|
| 20,128 |
| ||
Goodwill impairment |
| — |
|
| 410,041 |
| ||
Intangible asset impairment |
| — |
|
| 4,000 |
| ||
Total operating expenses |
| 89,505 |
|
| 502,107 |
| ||
Loss from operations |
| (16,845 | ) |
| (422,689 | ) | ||
Other income (expense) | ||||||||
Interest and other expense, net |
| (25,373 | ) |
| (25,726 | ) | ||
Loss from change in tax receivable agreement liability |
| (3,974 | ) |
| (2,460 | ) | ||
Gain from change in fair value of warrant liability |
| 3,761 |
|
| 14,680 |
| ||
(Loss) gain from change in fair value of contingent consideration |
| (2,280 | ) |
| 9,000 |
| ||
Total other expense |
| (27,866 | ) |
| (4,506 | ) | ||
Loss before income tax benefit |
| (44,711 | ) |
| (427,195 | ) | ||
Income tax benefit |
| 1,923 |
|
| 66,311 |
| ||
Net loss |
| (42,788 | ) |
| (360,884 | ) | ||
Less: Net loss attributable to noncontrolling interest |
| (3,926 | ) |
| (35,489 | ) | ||
Net loss attributable to E2open Parent Holdings, Inc. | $ | (38,862 | ) | $ | (325,395 | ) | ||
| ||||||||
Weighted-average common shares outstanding: | ||||||||
Basic |
| 306,732 |
|
| 302,502 |
| ||
Diluted |
| 306,732 |
|
| 302,502 |
| ||
Net loss attributable to E2open Parent Holdings, Inc. common | ||||||||
Basic | $ | (0.13 | ) | $ | (1.08 | ) | ||
Diluted | $ | (0.13 | ) | $ | (1.08 | ) | ||
E2OPEN PARENT HOLDINGS, INC. | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(Unaudited) | ||||||||
(In thousands) | May 31, 2024 | February 29, 2024 | ||||||
Assets | ||||||||
Cash and cash equivalents | $ | 160,203 |
| $ | 134,478 |
| ||
Restricted cash |
| 15,737 |
|
| 14,560 |
| ||
Accounts receivable, net |
| 111,359 |
|
| 161,556 |
| ||
Prepaid expenses and other current assets |
| 33,072 |
|
| 28,843 |
| ||
Total current assets |
| 320,371 |
|
| 339,437 |
| ||
Goodwill |
| 1,845,209 |
|
| 1,843,477 |
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