E2open Parent Holdings, Inc. (NYSE: ETWO), the connected supply chain SaaS platform with the largest multi-enterprise network, today announced financial results for its fiscal second quarter ended August 31, 2022.
“Subscription revenue, the primary indicator of our durable client relationships, grew 11% year over year, highlighting the resiliency of our business against the backdrop of a weakening macroeconomic environment,” said Michael Farlekas, chief executive officer of e2open. “Furthermore, we are maintaining our fiscal 2023 EBITDA guidance, despite continued FX headwinds to our top line, a testament to our commitment to driving profitability, and revenue growth.”
“We continue to see demand expand for our multi-enterprise supply chain as companies seek to become more agile in an incredibly dynamic global economy,” continued Farlekas. “Our new and existing client wins, expanding partnerships and growing pipeline are a testimony to the durability of our revenue model and our ability to grow in all market conditions. Our previously announced strategic spend for further growth acceleration in fiscal 2024 and beyond is well underway, with our key metrics on track to our plan.”
Fiscal Second Quarter 2023 Financial Highlights
- GAAP subscription revenue for the second quarter of 2023 grew 113.3% from the year-ago comparable period to $131.6 million or 81.9% of total revenue. Organic subscription revenue growth was 8.6% or 10.7% on a constant currency basis.
- Total GAAP revenue for the second quarter of 2023 grew 105.8% from the year-ago comparable period to $160.7 million. Total organic revenue growth was 6.7% or 8.9% on a constant currency basis.
- GAAP gross profit for the second quarter of 2023 grew 101.0% from the year-ago comparable period to $77.4 million. Non-GAAP gross profit grew 1.6% or 2.9% on a pro forma constant currency basis from the year-ago comparable period to $106.9 million. The second quarter of 2023 gross profit includes an approximate $2 million of previously disclosed strategic investments within the systems integrator ecosystem that e2open did not have in the comparable year-ago period.
- GAAP gross margin for the second quarter of 2023 was 48.2% compared to 49.3% from the year-ago comparable period. Non-GAAP gross margin was 66.5% or 66.0% on a constant currency basis compared to 69.9% from the year-ago comparable period.
- Adjusted EBITDA for the second quarter of 2023 decreased 4.0% or 5.8% on a pro forma constant currency basis from the year-ago comparable period to $48.3 million. Adjusted EBITDA margin was 30.1% or 29.0% on a constant currency basis versus 33.5% from the comparable year-ago period. The second quarter of 2023 adjusted EBITDA includes an approximate $6 million of previously disclosed strategic investments in marketing, sales and systems integrators partnerships that e2open did not have in the comparable year-ago period.
- Net loss for the second quarter of 2023 was $409.6 million compared to $24.0 million from the year-ago comparable period. GAAP and adjusted earnings per share for the second quarter of 2023 were $(1.22) and $0.05; respectively.
- Cash flow
- GAAP cash flow from operations was $2.2 million compared to $41.5 million from the year-ago comparable period, inclusive of M&A-related expenses.
- Adjusted unlevered free cash flow for the second quarter, adjusted for M&A, was $40.6 million, which represents 84.1% of adjusted EBITDA.
NOTE: Refer to Reconciliation of Pro Forma and Non-GAAP Information Tables at the end of this press release for more detail regarding revenue, gross margin, adjusted EBITDA margin, net loss, adjusted earnings per share, adjusted unlevered free cash flow and adjusted EBITDA. Prior year comparisons of non-GAAP measures include e2open, BluJay and Logistyx, as if BluJay and Logistyx were acquired on March 1, 2021.
Recent Business Highlights
- Introduced an innovative capability to automatically offer real-time spot market freight rates in partnership with carriers in e2open’s Transportation Management application, creating an incremental revenue source and value for e2open’s clients and network participants. Uber Freight is the first strategic partner to go live with this capability that leverages e2open’s network and AI-driven applications with large digital freight broker clients to provide tangible benefits to both buyer and seller of transportation services. E2open secured two additional digital freight brokerages in the quarter.
- Expanded partnership with Shippeo, a global leader in real-time multimodal transportation visibility, to provide clients with a new, unprecedented level of native real-time transportation visibility and supply chain execution management in a unified global platform, for all modes and geographies. The partnership adds another high-growth solution to the platform.
- Recognized as leader by IDC in five of five supply chain planning categories in the MarketScape Vendor Assessments. Categories include Holistic Planning, Supply Planning, Demand Planning, Sales and Operations Planning, and Inventory Optimization. As revealed by the research, no other provider has this depth of planning capabilities in the context of an execution platform.
- Won new logo business, expanded existing client relationships, and completed go-lives across all five product suites, multiple industries and geographic regions. One example is multinational retail and hospitality conglomerate, Landmark Group, which selected e2open to transform its supply chain operations, covering collaboration on procurement to optimizing transportation planning execution and managing trade compliance.
Financial Outlook for Fiscal Year 2023
As of October 11, 2022, e2open is providing updated guidance for the remainder of fiscal year 2023, which ends February 28, 2023, as follows:
Fiscal 2023 GAAP Subscription Revenue
- GAAP subscription revenue for fiscal 2023 is expected to be in the range of $535 million to $543 million versus prior guidance of $538 million to $546 million, due to an approximate $3 million negative impact from foreign exchange rate fluctuations when compared to our prior guidance. There is no change to guidance on a constant currency basis.
Fiscal 2023 Total GAAP Revenue
- Total GAAP revenue is expected to be in the range of $668 million to $676 million versus prior guidance of $672 million to $680 million, due to an approximate $4 million negative impact from foreign exchange rate fluctuations when compared to our prior guidance. There is no change to guidance on a constant currency basis.
Fiscal Third Quarter 2023 GAAP Subscription Revenue
- GAAP subscription revenue for the fiscal third quarter of 2023 is expected to be in the range of $131 million to $134 million including an approximate $4 million negative year-over-year impact from foreign exchange rate fluctuations.
Fiscal 2023 Non-GAAP Gross Profit Margin
- Non-GAAP gross profit margin is reaffirmed in the range of 68% to 70%. Fiscal 2023 Adjusted EBITDA
- Adjusted EBITDA is reaffirmed in the range of $217 million to $223 million reflecting an implied adjusted EBITDA margin of 32% to 33%.
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.
Quarterly Conference Call
E2open will host a conference call today at 5:00 p.m. ET to review fiscal 2023 second quarter financial results, in addition to discussing the Company’s outlook for the full fiscal year 2023. To access this call, dial 888-506-0062 (domestic) or 973-528-0011 (international). The conference ID is 833680. 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 October 25, 2022, at 877-481-4010 (domestic) or 919-882-2331 (international). The replay pass code is 46495. 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.