On October 9, 2024, E2open Parent Holdings Inc (ETWO, Financial) released its 8-K filing detailing its fiscal second quarter 2025 financial results. E2open, a cloud-based supply chain management SaaS platform, reported a total GAAP revenue of $152.2 million, which fell short of the analyst estimate of $154.82 million. The company also reported a GAAP net loss of $32.9 million, translating to a loss of $0.10 per share, compared to the estimated loss of $0.08 per share.
Company Overview
E2open Parent Holdings Inc is a leading provider of end-to-end, cloud-based supply chain management solutions. The company's platform integrates networks, data, and applications to optimize supply chain operations across various domains, including logistics, trade, and manufacturing. E2open operates primarily in the Americas, with significant presence in Europe and Asia Pacific.
Performance and Challenges
During the second fiscal quarter, E2open focused on enhancing client retention and sales execution, achieving sequential improvement in retention performance. However, the company faced challenges with delays in closing large, complex deals due to extended client decision timelines. This impacted their ability to achieve double-digit growth, although they maintained a strong market position with competitive solutions and a blue-chip customer base.
Financial Achievements
E2open's GAAP subscription revenue for Q2 FY25 was $131.6 million, representing 86.5% of total revenue. Despite a 2.3% decrease from the previous year, the company managed to deliver subscription revenue above the mid-point of its guidance. The adjusted EBITDA margin improved slightly to 36.1% from 35.4% in the prior year, indicating efficient cost management.
Key Financial Details
The company's GAAP gross profit for the quarter was $74.6 million, with a gross margin of 49.0%. Non-GAAP gross profit stood at $105.0 million, reflecting a margin of 69.0%. These metrics are crucial for assessing the company's operational efficiency and profitability in the competitive software industry.
“Our focused work to improve client retention, sales execution, and implementation excellence is resonating very well with our customer base,” said Marje Armstrong, CFO of E2open.
Income Statement Highlights
| Metric | Q2 FY25 | Q2 FY24 | Change |
|---|---|---|---|
| Total Revenue | $152.2 million | $158.5 million | -4.0% |
| GAAP Net Loss | $32.9 million | $38.6 million | -14.8% |
| Adjusted EBITDA | $54.9 million | $56.1 million | -2.2% |
Balance Sheet and Cash Flow
As of August 31, 2024, E2open reported total assets of $3.03 billion, with cash and cash equivalents amounting to $142.2 million. The company's total liabilities stood at $1.49 billion, reflecting a stable financial position. Net cash provided by operating activities was $28.4 million, indicating positive cash flow generation despite the net loss.
Analysis and Outlook
E2open's performance in Q2 FY25 highlights both achievements and challenges. While the company successfully improved client retention and maintained strong adjusted EBITDA margins, revenue shortfalls and deal closure delays pose ongoing challenges. The company's strategic focus on enhancing client success and operational efficiency is expected to drive future growth, although achieving sustainable double-digit growth remains a work in progress.
For the full fiscal year 2025, E2open has adjusted its revenue guidance to reflect a more conservative outlook, anticipating GAAP subscription revenue between $526 million and $532 million. The company remains committed to building revenue momentum and closing delayed deals as it progresses through the fiscal year.
Explore the complete 8-K earnings release (here) from E2open Parent Holdings Inc for further details.
