Release Date: October 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- E2open Parent Holdings Inc (ETWO, Financial) reported a solid subscription revenue performance in the second quarter, showing signs of stabilization and potential for future improvement.
- The company recorded important new subscription wins with both existing and new clients, indicating healthy market demand for their supply chain software solutions.
- E2open Parent Holdings Inc (ETWO) increased quarterly subscription bookings year over year and sequentially, demonstrating progress in their growth strategy.
- The company hosted a successful Connect 2024 conference, which was well-received by clients and partners, highlighting their commitment to innovation and client satisfaction.
- E2open Parent Holdings Inc (ETWO) made progress in reducing churn and improving client retention, which is expected to continue improving through the end of the year.
Negative Points
- Despite improvements, E2open Parent Holdings Inc (ETWO) is still experiencing delays in closing large deals due to extended customer timelines, impacting their pace of new subscription bookings.
- The company's professional services revenue declined by 13.1% year over year, falling below expectations due to delayed subscription bookings and execution challenges.
- E2open Parent Holdings Inc (ETWO) revised its full-year guidance to reflect a more conservative outlook, with expected declines in both subscription and total revenue.
- The company is facing longer deal cycles than anticipated, which has led to a more cautious view of their full-year bookings and revenue results.
- E2open Parent Holdings Inc (ETWO) reported negative adjusted operating cash flow in the second quarter, attributed to seasonal factors and delayed deal closures.
Q & A Highlights
Q: How did Q2 compare to Q1 in terms of large deal delays? Did things get worse, or was there an expected improvement that didn't materialize?
A: Gregory Randolph, Chief Commercial Officer: The nature of our big deals is very strategic, often requiring CEO-level decisions, which are taking longer than anticipated. We did see delays due to additional cycles of review. However, Q2 bookings and churn did improve compared to Q1, although not to the degree we expected.
Q: Are you seeing any momentum from your SAP customer base and pipeline, given the ERP upgrade cycle?
A: Gregory Randolph, Chief Commercial Officer: Yes, we are seeing demand as clients reevaluate their portfolios during the upgrade cycle. This creates opportunities for us to engage with clients and demonstrate our value proposition. Two of our Q2 wins in logistics were initiated from SAP-related evaluations.
Q: What are you hearing from your systems integrators as a channel for demand, and what needs to be done to spur that process?
A: Andrew Appel, Chief Executive Officer: We are partnering with strategic integrators to drive transformation and help them win more work, positioning us as the provider of choice. This involves joint service line and capability discussions to drive growth and transformation, focusing on building reference clients.
Q: Can you explain the reduction in professional services revenue guidance and what's driving the magnitude of the cut?
A: Marje Armstrong, Chief Financial Officer: The services business has inherent volatility, and large projects ending without new bookings can create timing issues. Large deals typically come with more attached PS services, and delays in these deals impacted revenue. We are also focusing on flawless implementations to drive customer satisfaction and higher subscription revenue.
Q: What are the strongest areas of new bookings among your product portfolio?
A: Gregory Randolph, Chief Commercial Officer: We see strong demand in logistics, where we combine transportation management, last-mile parcel, and visibility solutions, and in global trade management, where our solutions help manage goods and services across markets. These areas reflect our competitive differentiation and market demand.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
