Executive Summary
In Q1 2025, E2open Parent Holdings Inc. reported revenues of $151.2 million, down 5.6% year-over-year, as the company faced significant deal closure delays and a challenging market environment. Despite these challenges, management expressed optimism around a strategic shift towards client-centric solutions and enhanced customer engagement, which are expected to drive future growth. Adjusted EBITDA was $50.7 million with margins stable at 33.6%, indicative of solid operational management even amidst revenue declines. The company aims to improve retention rates and accelerate bookings in the second half of the fiscal year as they implement a disciplined approach to client renewals and satisfaction, promising a path toward regaining revenue growth and profitability.
Key Performance Indicators
QoQ: -34.72% | YoY:-33.80%
QoQ: -21.58% | YoY:-12.52%
Key Insights
**Revenue Performance**: Total revenue declined 5.6% year-over-year, driven primarily by a drop in subscription revenue to $131.4 million, a decrease of 2.6% year-over-year but within management's guidance range. Professional services revenue also fell significantly by 21.6% to $19.8 million due to resource reallocation towards client satisfaction initiatives.
**Profitability Metrics**: Gross profit decreased to $102.6 million, leading to a non-GAAP gross margin of 67.8%. E2open reported a...
Financial Highlights
Revenue Performance: Total revenue declined 5.6% year-over-year, driven primarily by a drop in subscription revenue to $131.4 million, a decrease of 2.6% year-over-year but within management's guidance range. Professional services revenue also fell significantly by 21.6% to $19.8 million due to resource reallocation towards client satisfaction initiatives.
Profitability Metrics: Gross profit decreased to $102.6 million, leading to a non-GAAP gross margin of 67.8%. E2open reported adjusted EBITDA of $50.7 million, slightly down from the previous year, maintaining a healthy EBITDA margin of 33.6%. This reflects ongoing strict cost management amid a contraction in revenues.
Cash Flow: Adjusted operating cash flow was robust at $39.1 million, with total cash and equivalents reaching approximately $160.2 million, indicating strong liquidity despite revenue challenges and investments in client services.
Retention and Growth Strategies: Despite a challenging quarter, management has demonstrated confidence in future performance, with a clear focus on reducing churn and capturing previously delayed deals.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
151.16M |
-5.59% |
-4.60% |
| Gross Profit |
52.57M |
-33.80% |
-34.72% |
| Operating Income |
-16.56M |
-12.52% |
-21.58% |
| Net Income |
-38.86M |
89.23% |
7.91% |
| EPS |
-0.13 |
89.08% |
7.14% |
Key Financial Ratios
operatingProfitMargin
-11%
operatingCashFlowPerShare
$0.12
freeCashFlowPerShare
$0.1
Management Commentary
Client-Centric Strategy: Andrew Appel, CEO, emphasized the need for visibility and orchestration in supply chain management, stating: "E2open's comprehensive software management platform combines networks, data, and applications, purpose-built for today's supply chain challenges. This positions us well to capture an attractive and fast-growing market opportunity."
Retention Management: Appel further highlighted the company’s new approach to renewals: "We are now approaching every renewal as an opportunity to strengthen and expand client relationships. This disciplined management process is part of our standard operating cadence, ensuring we focus on client satisfaction and early renewals."
Growth Expectations: Marje Armstrong, CFO, noted that Q1's peak churn was a turning point: "We expect to see improvements in churn and bookings moving well into the second half of the year as the impact of our proactive client engagement starts to materialize."
"E2open's comprehensive software management platform combines networks, data, and applications, purpose-built for today's most complex supply chain challenges."
— Andrew Appel, CEO
"During Q1, we are confident we turned the corner on the retention issues that have hurt our recent revenue growth."
— Marje Armstrong, CFO
Forward Guidance
E2open projects a second-quarter subscription revenue range of $129 million to $132 million, anticipating continued challenges from Q1 deal slip-through. However, the company maintains their FY '25 full-year revenue guidance, forecasting total revenue between $630 million and $645 million, contingent on an expected increase in bookings and improved client retention metrics in the latter half of the fiscal year. Management indicated they are focusing on building a strong pipeline and decreasing churn, leading to an optimistic outlook for growth acceleration into FY '26.