E2open Announces Fiscal 2024 Third Quarter Financial Results

GAAP subscription revenue of $132.8 million at the high end of Q3 guidance

E2open Parent Holdings, Inc. (NYSE:ETWO) ("e2open" or the "Company"), the connected supply chain SaaS platform with the largest multi-enterprise network, today announced financial results for its fiscal third quarter ended November 30, 2023.

"In my first three months leading e2open, I have seen first-hand the unique capabilities of our product offering and the significant value that our solutions are delivering for some of the world's largest and best-known companies," said Andrew Appel, e2open's interim chief executive officer. "Although our revenue growth has been below our potential, we are intently focused on returning to sustainable growth by implementing specific action plans to improve sales execution, deepen client engagement, and deliver flawless implementations. While this change process will take several quarters to materially impact our top line, our teams are excited by the client-centric approach, the early signs of progress we saw during the fiscal third quarter, and the tremendous opportunity we have in front of us to create value for our clients and shareholders."

"In the third fiscal quarter, e2open delivered subscription revenue near the high end of our guidance and maintained strong adjusted EBITDA margins," said Marje Armstrong, chief financial officer of e2open. "We exited the quarter with better sales execution in both subscription and professional services as evidenced by large deal closings with major new and existing clients across a range of industry sectors. Although we still have work to do to transform our go-to-market and client engagement model, and conditions in some end-markets remain uncertain, our improved third quarter execution gives us confidence in the steps we are taking to re-accelerate e2open's growth."

Fiscal Third Quarter 2024 Financial Highlights

• Revenue
  • GAAP subscription revenue for the third quarter of 2024 was $132.8 million, a decrease of 1.5% from the year-ago comparable period and 84.3% of total revenue. Subscription revenue decreased 2.2% on a constant currency basis.
  • Total GAAP revenue for the third quarter of 2024 was $157.5 million, a decrease of 4.5% from the year-ago comparable period. Total revenue decreased 5.2% on a constant currency basis.

• GAAP gross profit for the third quarter of 2024 was $78.6 million, a decrease of 6.6% from the year-ago comparable period. Non-GAAP gross profit was $109.7 million, down 3.4% and 4.0% on a constant currency basis.

• GAAP gross margin for the third quarter of 2024 was 49.9% compared to 51.0% from the year-ago comparable period. Non-GAAP gross margin was 69.6% on an organic basis and 69.7% on a constant currency basis compared to 68.9% from the comparable year-ago period.

• GAAP Net loss for the third quarter of 2024 was $740.0 million compared to a net income of $5.5 million from the year-ago comparable period. Adjusted EBITDA for the third quarter of 2024 was $55.4 million, a decrease of 1.4% and 1.5% on a constant currency basis from the year-ago comparable period. Adjusted EBITDA margin was 35.1% and 35.4% on a constant currency basis versus 34.1% from the comparable year-ago period.

• GAAP EPS for the third quarter of 2024 was a loss of $2.20. Adjusted EPS for the third quarter of 2024 was $0.04.

• Cash flow
  • GAAP operating cash flow on a year-to-date basis was $56.7 million compared to $43.2 million from the year-ago comparable period, inclusive of non-recurring expenses.
  • Adjusted operating cash flow on a year-to-date basis, exclusive of non-recurring expenses, was $79.0 million, which represents 47.8% of year-to-date adjusted EBITDA.

Recent Business Highlights

• Selected by Scan Global Logistics (SGL) to optimize the global freight forwarder's operations across multiple modes of transportation and an expansive geography in what the client called "the single largest and most important IT project in SGL's history." The multi-year agreement helps SGL reduce freight and operational costs, increase transportation efficiency, and enhance its end-user and customer experience.

• Closed new logo business including one of the world's largest commercial vehicle manufacturers that selected e2open's global screening solution to reduce compliance risk for over 2.5 million partners; and an international designer and manufacturer of sustainable plastic packaging that chose e2open's Transportation Management and Logistics as a Service to optimize its logistics operations and realize transportation cost savings.

• Implemented a large project with NORTERA, a leading North American food manufacturer of canned and frozen fruits and vegetables. With e2open's Transportation Management, positioned as a Leader by Gartner, NORTERA gains network visibility, automated invoicing processes, and world-class transportation execution and reporting to increase efficiency, reduce freight costs, and improve service levels.

• Expanded business with existing major clients across a variety of industry sectors. These large cross-sell wins included a Fortune 500 multinational conglomerate that has been an e2open client since 2015, and a leading provider of enterprise software, each of which selected e2open for its proven ability to deliver a comprehensive and scalable Channel Data Management solution for complex partner ecosystems.

• Implemented a new project with existing client Vertiv, a global leader in critical digital infrastructure technologies. The project brought synergies around reusing the common master data and established a single feed across all applications, an example of e2open's connected supply chain capabilities. This implementation has contributed to lower partner management costs and a better user experience for Vertiv.

• Presented annual client awards at Connect 2023 conference, recognizing customers who have achieved remarkable results in supply chain and channel innovation utilizing e2open solutions. Award winners were Vertiv, QSC, Tapestry, Inc., Ball Corporation, and High Liner Foods.

Financial Outlook for Fiscal Year 2024

As of January 9, 2024, e2open is updating full year 2024 guidance previously provided on October 10, 2023, and providing fourth quarter 2024 guidance as follows:

Fiscal 2024 Subscription GAAP Revenue

• GAAP subscription revenue for fiscal 2024 is expected to be in the range of $533 million to $536 million (versus prior guidance of $530 million to $538 million), reflecting a 0.3% organic growth rate at the mid-point.

Fiscal 2024 Total GAAP Revenue

• Total GAAP revenue for fiscal 2024 is expected to be in the range of $628 million to $633 million (versus prior guidance of $625 million to $635 million), reflecting a 3.3% year-over-year decrease at the mid-point.

Fiscal Fourth Quarter 2024 GAAP Subscription Revenue

• GAAP subscription revenue for the fiscal fourth quarter of 2024 is expected to be in the range of $131 million to $134 million, reflecting a 3.2% year-over-year decrease at the mid-point.

Fiscal 2024 Non-GAAP Gross Profit Margin

• Non-GAAP gross profit margin for fiscal 2024 is still expected to be in the range of 68% to 70%.

Fiscal 2024 Adjusted EBITDA

• Adjusted EBITDA for fiscal 2024 is still expected to be in the range of $215 million to $220 million, reflecting an implied adjusted EBITDA margin in the range of 34% to 35%.

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 third quarter 2024 financial results, in addition to discussing the Company's outlook for the full fiscal year 2024. To access this call, dial 888-506-0062 (domestic) or 973-528-0011 (international). The conference ID is 740053. 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 January 23, 2024, at 877-481-4010 (domestic) or 919-882-2331 (international). The replay passcode is 49575. 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.

About e2open

E2open is the connected supply chain software platform that enables the world's largest companies to transform the way they make, move, and sell goods and services. With the broadest cloud-native global platform purpose-built for modern supply chains, e2open connects more than 480,000 manufacturing, logistics, channel, and distribution partners as one multi-enterprise network tracking over 15 billion transactions annually. Our SaaS platform anticipates disruptions and opportunities to help companies improve efficiency, reduce waste, and operate sustainably. Moving as one.™ Learn More: www.e2open.com.

E2open and "Moving as one." are the registered trademarks of E2open, LLC. All other trademarks, registered trademarks and service marks are the property of their respective owners.

Non-GAAP Financial Measures

This press release includes certain financial measures not presented in accordance with generally accepted accounting principles ("GAAP") including non-GAAP revenue, non-GAAP subscription revenue, non-GAAP professional services and other revenue, adjusted EBITDA, adjusted EBITDA margin, non-GAAP gross profit, non-GAAP net income, non-GAAP gross margin, adjusted free cash flow and adjusted earnings per share. These non-GAAP financial measures are not a measure of financial performance in accordance with GAAP and may exclude items that are significant in understanding and assessing the Company's financial results. Therefore, these measures should not be considered in isolation or as an alternative to net income, cash flows from operations or other measures of profitability, liquidity, or performance under GAAP. You should be aware that the Company's presentation of these measures may not be comparable to similarly titled measures used by other companies.

The Company believes this non-GAAP measure of financial results provides useful information to management and investors regarding certain financial and business trends relating to the Company's financial condition and results of operations. The Company believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends in comparing the Company's financial measures with other similar companies, many of which present similar non-GAAP financial measures to investors. These non-GAAP financial measures are subject to inherent limitations as they reflect the exercise of judgments by management about which expense and income are excluded or included in determining these non-GAAP financial measures.

Safe Harbor Statement

Certain statements in this press release are "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created thereby. These statements relate to future events or the Company's future financial performance and involve known and unknown risks, uncertainties and other factors that may cause the actual results, levels of activity, performance or achievements of the Company or its industry to be materially different from those expressed or implied by any forward-looking statements. In particular, statements about the Company's expectations, beliefs, plans, objectives, assumptions, future events or future performance contained in this press release are forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as "may," "will," "could," "would," "should," "expect," "plan," "anticipate," "intend," "believe," "estimate," "predict," "potential," "outlook," "guidance" or the negative of those terms or other comparable terminology.

Please see the Company's documents filed or to be filed with the Securities and Exchange Commission, including the annual report filed on Form 10-K, and any amendments thereto for a discussion of certain important risk factors that relate to forward-looking statements contained in this press release. The Company has based these forward-looking statements on its current expectations, assumptions, estimates and projections. While the Company believes these expectations, assumptions, estimates, and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond the Company's control. These and other important factors may cause actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. Any forward-looking statements are made only as of the date hereof, and unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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