EPS of $-0.79 decreased by 464.3% from previous year
Gross margin of 50.2%
Net income of -244.20M
"'Our focus on operational discipline and client value has begun to yield results.' - Andrew Appel" - Andrew Appel
E2open Parent Holdings Inc (ETWO) Q4 2025 Financial Results Analysis: Navigating Challenges and Charting a Path to Recovery
Executive Summary
E2open Parent Holdings Inc (ETWO) reported a challenging fiscal Q4 2025 with total revenues declining 3.6% year-over-year to $152.7 million, reflecting the continuing impact of elevated customer churn and past booking slowdowns. Despite these pressures, the company noted sequential growth in subscription revenue and improving client retention metrics, with a gross retention rate achieving 91% and a net retention rate of 99%, signaling signs of operational stabilization under CEO Andrew Appel's leadership. Management has focused heavily on customer satisfaction and enhancing implementation processes, which have yielded early positive indicators for growth as they look ahead to FY 2026. Optimistic guidance indicates a potential return to positive growth, supported by ongoing improvements in bookings and customer retention efforts.
Key Performance Indicators
Revenue
152.68M
QoQ: 0.67% | YoY:-3.64%
Gross Profit
76.64M
50.20% margin
QoQ: 1.18% | YoY:-4.84%
Operating Income
-245.65M
QoQ: 34.45% | YoY:-1 703.36%
Net Income
-244.20M
QoQ: 29.61% | YoY:-478.65%
EPS
-0.79
QoQ: 29.46% | YoY:-464.29%
Revenue Trend
Margin Analysis
Key Insights
**Total Revenue:** $152.7 million, down 3.6% YoY
**Subscription Revenue:** $133.0 million in Q4, a decline of 1.0% YoY (0.5% decline on a constant currency basis)
**Gross Profit:** $76.6 million, with a gross margin of 50.1%
**Net Loss:** $268.5 million, influenced by a goodwill impairment charge of $245 million
**Adjusted EBITDA:** $56.3 million, representing a margin of 36.9%
Financial Highlights
- Total Revenue: $152.7 million, down 3.6% YoY
- Subscription Revenue: $133.0 million in Q4, a decline of 1.0% YoY (0.5% decline on a constant currency basis)
- Gross Profit: $76.6 million, with a gross margin of 50.1%
- Net Loss: $268.5 million, influenced by a goodwill impairment charge of $245 million
- Adjusted EBITDA: $56.3 million, representing a margin of 36.9%
- Cash at End of Period: $197.4 million, with an operating cash flow of $56.7 million
- Retention Rates: Gross retention at 91%, net retention at 99%
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
152.68M
-3.64%
0.67%
Gross Profit
76.64M
-4.84%
1.18%
Operating Income
-245.65M
-1 703.36%
34.45%
Net Income
-244.20M
-478.65%
29.61%
EPS
-0.79
-464.29%
29.46%
Key Financial Ratios
currentRatio
1.14
grossProfitMargin
50.2%
operatingProfitMargin
-160.9%
netProfitMargin
-159.9%
returnOnAssets
-10.3%
returnOnEquity
-28.9%
debtEquityRatio
1.26
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Client Satisfaction and Retention: Andrew Appel emphasized, 'Our focus on operational discipline and client value has begun to yield results... our subscription business is stabilizing and moving in the right direction.'
Investment in Technology: Appel noted the ongoing integration of AI, stating, 'Generative AI is providing us with a unique opportunity to add capabilities to our software... It is a requirement to stay relevant.'
Commercial Strategy Progress: Greg Randolph highlighted, 'Our fourth quarter subscription bookings were solid... and we achieved our highest quarterly total since the end of FY 2023.'
'Our focus on operational discipline and client value has begun to yield results.' - Andrew Appel
â Andrew Appel
'We expect client retention to improve year-over-year and bookings momentum to build as we move through FY 2026.' - Marje Armstrong
â Marje Armstrong
Forward Guidance
Management projects FY 2026 subscription revenue between $525 million and $535 million (flat to down by 1%). The focus will remain on improving client retention and building bookings momentum. Adjusted EBITDA is expected to fall between $200 million and $210 million, with a margin of 33%-34%. Appel indicated, 'We have the right ingredients to grow our business... our commitment to long-term value creation is strong.'
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
ETWO Focus
50.20%
-1.61%
-28.90%
0.00%
BLKB
54.40%
-1.22%
-2.36%
-2.79%
ENFN
69.00%
2.99%
0.17%
2,005.99%
MODN
57.70%
-0.59%
0.55%
374.50%
CVT
64.80%
-3.27%
-1.32%
-41.09%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Given the strong retention improvements and sequential growth in subscription revenues, alongside a commitment to enhancing client value, E2open appears well-positioned for gradual recovery. However, concerns over prior losses and market conditions must be monitored closely. Investors should watch the company's execution on projected growth strategies, especially in leveraging AI and improving customer relations to regain market confidence.
Key Investment Factors
Growth Potential
E2open is leveraging AI advancements and has seen positive trends in subscription growth, signaling potential for stabilization and future growth. The anticipation of new product offerings may attract additional clients and enhance revenue streams.
Profitability Risk
The significant impairment charge reflects volatility in market perception which can deter investors. The ongoing pressure from high customer churn, influenced by economic uncertainties, presents a substantial risk to revenue stability.
Financial Position
E2open has a cash balance of $197.4 million, providing runway to invest in growth initiatives. However, the negative equity position (-$2.5 billion) due to accumulated losses and goodwill impairments poses a long-term challenge.
SWOT Analysis
Strengths
Established cloud-based supply chain solutions with a robust customer base.
Strong focus on client satisfaction and improved retention metrics.
Recognition as a leader in multiple industry quadrants by reputable analysts.
Weaknesses
Substantial net losses and impairment charges overshadow operational gains.
Negative equity situation can be a deterrent for potential investors.
Opportunities
Growing demand for AI-driven solutions and capabilities in supply chain management.
Potential to upsell existing clients with renewed contracts and implementation enhancements.
Threats
Intense competition in the Technology sector that may limit growth opportunities.
Economic uncertainties impacting client spending and overall market conditions.