E2open Announces Fiscal 2024 Third Quarter Financial Results
E2open Parent Holdings, Inc. (NYSE: ETWO) reported GAAP subscription revenue of $132.8 million, reaching the high end of Q3 guidance. The company highlighted improved sales execution, large deal closings, and a client-centric approach. However, the fiscal third quarter saw a decrease in revenue compared to the year-ago period.
Positive
GAAP subscription revenue at the high end of Q3 guidance
Improved sales execution and large deal closings
Client-centric approach
Negative
Decrease in revenue compared to the year-ago period
The recent financial results announced by e2open indicate a slight contraction in revenue , with GAAP subscription revenue for the third quarter of 2024 down by 1.5% year-over-year and total GAAP revenue also decreasing by 4.5%. This decline is noteworthy as subscription models are typically seen as stable revenue generators. The decrease on a constant currency basis suggests that currency fluctuations are not the sole cause of the decline, pointing towards potential underlying issues in sales or market demand. The fact that the subscription revenue still hit the high end of the company's guidance could imply that the management has an accurate understanding of the current business climate and is setting realistic expectations.
Furthermore, the adjusted EBITDA margin increase from 34.1% to 35.1% year-over-year, despite a decrease in adjusted EBITDA, indicates improved operational efficiency or cost management. However, investors should consider whether these margin improvements can be sustained in the long term, especially if revenue continues to decline. The net loss of $740.0 million is a significant deviation from the net income reported in the previous year and warrants a closer examination of the one-time charges or strategic decisions that led to this outcome.
From a financial perspective, the increase in GAAP operating cash flow year-to-date is a positive sign, suggesting that e2open is effectively managing its cash despite the downturn in revenue. The cash flow figures, particularly the adjusted operating cash flow, which represents 47.8% of year-to-date adjusted EBITDA, indicate a strong conversion of earnings into cash, which is critical for sustaining operations and investing in growth initiatives. However, the substantial GAAP net loss reported may raise concerns among investors about the company's profitability and future financial health.
Looking at the updated full-year guidance , the narrowed revenue range and the modest organic growth rate projection may reflect management's cautious optimism about the company's ability to stabilize and grow in the current fiscal year. Investors should monitor whether the company's efforts to improve sales execution and client engagement translate into a tangible improvement in financial performance in the subsequent quarters.
e2open's position as a connected supply chain SaaS platform places it in a critical industry, especially given the recent disruptions in global supply chains. The company's focus on improving sales execution and client engagement is essential in a sector where customer retention and expansion are key drivers of growth. The large deal closings and new logo business reported are indicators of competitive strength and the potential for market share expansion.
The role of e2open's solutions in optimizing operations for clients like Scan Global Logistics and the new projects implemented with NORTERA and Vertiv underscore the strategic importance of supply chain visibility and efficiency . These implementations reflect a growing industry trend towards digital transformation in supply chain management, which is likely to continue as companies seek to mitigate risks and improve resilience. The company's ability to secure new business and expand relationships with major clients suggests a strong product-market fit, which could be a positive signal for its long-term growth prospects.
01/09/2024 - 04:15 PM
GAAP subscription revenue of $132.8 million at the high end of Q3 guidance
AUSTIN, Texas --(BUSINESS WIRE)--
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.
E2OPEN PARENT HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended November 30,
(In thousands, except per share amounts)
2023
2022
Revenue
Subscriptions
$
132,800
$
134,884
Professional services and other
24,697
30,009
Total revenue
157,497
164,893
Cost of Revenue
Subscriptions
36,689
35,931
Professional services and other
17,642
20,417
Amortization of acquired intangible assets
24,590
24,402
Total cost of revenue
78,921
80,750
Gross Profit
78,576
84,143
Operating Expenses
Research and development
24,937
24,939
Sales and marketing
22,583
20,448
General and administrative
24,739
23,073
Acquisition-related expenses
9
1,969
Amortization of acquired intangible assets
20,014
19,965
Goodwill impairment
687,700
—
Intangible asset impairment
30,000
—
Total operating expenses
809,982
90,394
Loss from operations
(731,406
)
(6,251
)
Other income (expense)
Interest and other expense, net
(24,643
)
(21,270
)
Gain from change in tax receivable agreement liability
2,888
2,697
Gain from change in fair value of warrant liability
2,617
16,150
Gain from change in fair value of contingent consideration
5,100
6,300
Total other (expense) income
(14,038
)
3,877
Loss before income tax provision
(745,444
)
(2,374
)
Income tax benefit
5,413
7,877
Net (loss) income
(740,031
)
5,503
Less: Net (loss) income attributable to noncontrolling interest
(72,475
)
698
Net (loss) income attributable to E2open Parent Holdings, Inc.
$
(667,556
)
$
4,805
Weighted-average common shares outstanding:
Basic
303,848
302,201
Diluted
303,848
302,359
Net (loss) income attributable to E2open Parent Holdings, Inc. common shareholders per share:
Basic
$
(2.20
)
$
0.02
Diluted
$
(2.20
)
$
0.02
E2OPEN PARENT HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
November 30, 2023
February 28, 2023
Assets
Cash and cash equivalents
$
110,279
$
93,032
Restricted cash
19,659
11,310
Accounts receivable, net
127,330
174,809
Prepaid expenses and other current assets
30,483
25,200
Total current assets
287,751
304,351
Goodwill
1,846,263
2,927,807
Intangible assets, net
886,315
1,051,124
Property and equipment, net
70,024
72,476
Operating lease right-of-use assets
21,580
18,758
Other noncurrent assets
28,559
25,659
Total assets
$
3,140,492
$
4,400,175
Liabilities and Stockholders' Equity
Accounts payable and accrued liabilities
$
83,196
$
97,491
Channel client deposits payable
19,659
11,310
Deferred revenue
176,253
203,824
Current portion of notes payable
11,122
11,144
Current portion of operating lease obligations
7,317
7,622
Current portion of financing lease obligations
1,120
2,582
Income taxes payable
1,721
2,190
Total current liabilities
300,388
336,163
Long-term deferred revenue
2,833
2,507
Operating lease obligations
17,959
15,379
Financing lease obligations
3,188
1,049
Notes payable
1,038,908
1,043,636
Tax receivable agreement liability
59,663
69,745
Warrant liability
10,830
29,616
Contingent consideration
14,188
29,548
Deferred taxes
66,038
144,529
Other noncurrent liabilities
721
1,083
Total liabilities
1,514,716
1,673,255
Commitments and Contingencies
Stockholders' Equity
Class A common stock
30
30
Class V common stock
—
—
Series B-1 common stock
—
—
Series B-2 common stock
—
—
Additional paid-in capital
3,395,158
3,378,633
Accumulated other comprehensive loss
(45,892
)
(68,603
)
Accumulated deficit
(1,831,502
)
(803,679
)
Treasury stock, at cost
(2,473
)
(2,473
)
Total E2open Parent Holdings, Inc. equity
1,515,321
2,503,908
Noncontrolling interest
110,455
223,012
Total stockholders' equity
1,625,776
2,726,920
Total liabilities and stockholders' equity
$
3,140,492
$
4,400,175
E2OPEN PARENT HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended November 30,
(In thousands)
2023
2022
Cash flows from operating activities
Net loss
$
(1,139,544
)
$
(416,703
)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation and amortization
160,758
159,831
Amortization of deferred commissions
4,452
2,878
Provision for credit losses
2,657
315
Amortization of debt issuance costs
3,961
3,783
Amortization of operating lease right-of-use assets
5,454
5,813
Share-based compensation
18,728
13,139
Deferred income taxes
(79,791
)
(143,012
)
Right-of-use assets impairment charge
619
4,137
Goodwill impairment charge
1,097,741
514,816
Indefinite-lived intangible asset impairment charge
34,000
—
Gain from change in tax receivable agreement liability
(8,355
)
(9,089
)
Gain from change in fair value of warrant liability
(18,786
)
(36,764
)
Gain from change in fair value of contingent consideration
(15,360
)
(17,760
)
Gain on operating lease termination
(187
)
—
(Gain) loss on disposal of property and equipment
(16
)
537
Changes in operating assets and liabilities:
Accounts receivable
44,822
10,876
Prepaid expenses and other current assets
(3,972
)
4,311
Other noncurrent assets
(7,351
)
(4,094
)
Accounts payable and accrued liabilities
(16,712
)
(12,946
)
Channel client deposits payable
8,349
(5,943
)
Deferred revenue
(27,244
)
(26,899
)
Changes in other liabilities
(7,568
)
(4,075
)
Net cash provided by operating activities
56,655
43,151
Cash flows from investing activities
Payments for acquisitions - net of cash acquired
—
(179,243
)
Capital expenditures
(22,301
)
(40,473
)
Minority investment in private firm
—
(3,000
)
Net cash used in investing activities
(22,301
)
(222,716
)
Cash flows from financing activities
Proceeds from indebtedness
—
215,000
Repayments of indebtedness
(8,366
)
(103,174
)
Repayments of financing lease obligations
(2,432
)
(2,312
)
Repurchase of common units
—
(1,397
)
Payments of debt issuance costs
—
(4,766
)
Net cash (used in) provided by financing activities
(10,798
)
103,351
Effect of exchange rate changes on cash and cash equivalents
2,040
478
Net increase (decrease) in cash, cash equivalents and restricted cash
25,596
(75,736
)
Cash, cash equivalents and restricted cash at beginning of period
104,342
174,554
Cash, cash equivalents and restricted cash at end of period
$
129,938
$
98,818
E2OPEN PARENT HOLDINGS, INC.
RECONCILIATION OF PRO FORMA INFORMATION
TABLE I
Fiscal Third Quarter 2024
(in millions)
Q3
Q3
$ Var
% Var
FY2024
FY2023
PRO FORMA REVENUE RECONCILIATION
Total GAAP Revenue
157.5
164.9
(7.4)
(4.5% )
Constant currency FX impact (1)
(1.1)
-
(1.1)
n/m
Total non-GAAP revenue (constant currency basis) (2)
$156.4
$164.9
($8.5 )
(5.2% )
GAAP Subscription Revenue
132.8
134.9
(2.1)
(1.5% )
Constant currency FX impact (1)
(0.8)
-
(0.8)
n/m
Non-GAAP subscription revenue (constant currency basis) (2)
$132.0
$134.9
($2.9 )
(2.2% )
GAAP Professional Services and other revenue
24.7
30.0
(5.3)
(17.7% )
Constant currency FX impact (1)
(0.3)
-
(0.3)
n/m
Non-GAAP professional services and other revenue (constant currency basis) (2)
$24.4
$30.0
($5.6 )
(18.6% )
PRO FORMA GROSS PROFIT RECONCILIATION
GAAP Gross profit
78.6
84.1
(5.6)
(6.6% )
Depreciation and amortization
28.7
28.4
0.3
1.0%
Share-based compensation (3)
1.3
0.5
0.8
142.6%
Non-recurring/non-operating costs (4)
1.1
0.5
0.6
115.7%
Non-GAAP gross profit
$109.7
$113.6
($3.9 )
(3.4% )
Non-GAAP Gross Margin %
69.6%
68.9%
Constant currency FX impact (1)
(0.6)
-
(0.6)
n/m
Total non-GAAP gross profit (constant currency basis) (2)
$109.1
$113.6
($4.5 )
(4.0% )
Non-GAAP Gross Margin % (constant currency basis) (2)
69.7%
68.9%
PRO FORMA ADJUSTED EBITDA RECONCILIATION
Net income (loss)
(740.0)
5.5
(745.5)
n/m
Interest expense, net
24.9
19.5
5.4
27.8%
Income tax benefit
(5.4)
(7.9)
2.5
(31.3% )
Depreciation and amortization
53.6
52.5
1.1
2.2%
EBITDA
($666.9 )
$69.6
($736.5 )
n/m
Share-based compensation (3)
6.8
4.8
2.0
42.5%
Non-recurring/non-operating costs (4)
8.3
3.2
5.1
158.6%
Acquisition-related adjustments (5)
0.0
2.0
(2.0)
(99.5% )
Change in tax receivable agreement liability (6)
(2.9)
(2.7)
(0.2)
7.0%
Change in fair value of warrant liability (7)
(2.6)
(16.2)
13.5
(83.8% )
Change in fair value of contingent consideration (8)
(5.1)
(6.3)
1.2
(19.0% )
Goodwill impairment
687.7
0.0
687.7
n/m
Right-of-use assets & Intangible impairment charge
30.1
1.8
28.3
1,608.5%
Adjusted EBITDA
$55.4
$56.2
($0.8 )
(1.4% )
Adjusted EBITDA Margin %
35.1%
34.1%
Constant currency FX impact (1)
(0.0)
-
(0.0)
n/m
Total adjusted EBITDA (constant currency basis) (2)
$55.3
$56.2
($0.8 )
(1.5% )
Adjusted EBITDA Margin % (constant currency basis) (2)
35.4%
34.1%
(1) Constant Currency refers to pro-forma amounts excluding the impact of translating foreign currencies into U.S. dollars. To calculate foreign currency translation on a constant currency basis, operating results for the current year period for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the exchange rates in effect during the comparable period of the prior year (rather than the actual exchange rates in effect during the current year period)
(2) Constant Currency refers to pro forma amounts excluding translation and transactional impacts from foreign currency exchange rates.
(3) Reflects non-cash, long-term share-based compensation expense.
(4) Primarily includes other non-recurring expenses such as systems integrations and consulting, advisory fees and certain severance costs.
(5) Primarily includes advisory, consulting, accounting and legal expenses incurred in connection with mergers and acquisitions activity, including related valuation, negotiation and integration costs and capital-raising activities for costs related to the BluJay and Logistyx acquisitions.
(6) Represents the expense related to the change in the fair value of the tax receivable agreement liability, including interest.
(7) Represents the fair value adjustment at each balance sheet date of the warrant liability related to the public, private placement, and forward purchase warrants.
(8) Represents the fair value adjustment at each balance sheet date of the contingent consideration liability related to the restricted Series B-2 common stock and Series 2 RCUs.
E2OPEN PARENT HOLDINGS, INC.
RECONCILIATION OF NON-GAAP EXPENSES
TABLE II
Fiscal Third Quarter 2024
(in millions)
GAAP
Non-recurring(1)
Impairment
Charges(2)
Depreciation & Amortization
Share-Based Compensation
Non-GAAP (Adjusted)
% of Revenue
COST OF GOODS
Subscriptions
36.7
(0.3)
-
(3.9)
(0.7)
31.7
23.9%
Professional services and other
17.6
(0.8)
-
(0.2)
(0.6)
16.1
65.3%
Amortization of intangibles
24.6
-
-
(24.6)
-
-
Total cost of revenue
$78.9
($1.1 )
-
($28.7 )
($1.3 )
$47.8
30.4%
Gross Profit
$78.6
$1.1
-
$28.7
$1.3
$109.7
69.6%
OPERATING COSTS
Research & development
24.9
(0.3)
-
(4.2)
(1.7)
18.8
11.9%
Sales & marketing
22.6
(0.3)
-
(0.3)
(1.6)
20.4
12.9%
General & administrative
24.7
(6.8)
(0.1)
(0.4)
(2.3)
15.1
9.6%
Acquisition related expenses
0.0
(0.0)
-
-
-
-
Amortization of intangibles
20.0
-
-
(20.0)
-
-
Intangible impairment
30.0
-
(30.0)
-
-
-
Goodwill impairment
687.7
-
(687.7)
-
-
-
Total operating expenses
$810.0
($7.5 )
($717.8 )
($24.9 )
($5.5 )
$54.3
34.5%
(1) Primarily includes other non-recurring expenses such as systems integrations and consulting, advisory fees, and certain severance costs.
(2) The company recognized a right-of-use asset impairment charge of $0.1M in G&A, Intangible impairment of $30.0M and $687.7M Goodwill impairment in Q3 FY24.
E2OPEN PARENT HOLDINGS, INC.
RECONCILIATION OF ADJUSTED EARNINGS PER SHARE
TABLE III
Fiscal Third Quarter 2024
(in millions, except per share amounts)
Q3 24
GAAP Net loss
(740.0)
Interest expense, net
24.9
Income taxes benefit
(5.4)
Depreciation & amortization
53.6
EBITDA
($666.9 )
Share-based compensation
6.8
Non-recurring/non-operating costs
8.3
Acquisition-related adjustments
0.0
Change in tax receivable agreement liability
(2.9)
Change in fair value of warrant liability
(2.6)
Change in fair value of contingent consideration
(5.1)
Goodwill impairment
687.7
Right-of-use assets & Intangible impairment charge
30.1
Adjusted EBITDA
$55.4
Depreciation
(9.0)
Interest and other expense, net
(24.9)
Adjusted EBIT
$21.4
Normalized income taxes (1)
(5.1)
Adjusted Net Income
$16.3
Adjusted basic shares outstanding
388.0
Adjusted earnings per share
$0.04
(1) Income taxes calculated using 24% effective rate.
E2OPEN PARENT HOLDINGS, INC.
ADJUSTED FREE CASH FLOW
TABLE IV
Fiscal Third Quarter 2024
(in millions)
Q1 24
Q2 24
Q3 24
Q3 YTD
GAAP operating cash flow
36.5
14.8
5.4
56.7
Add: Non-recurring cash payments (1)
3.4
1.9
25.5
30.7
Add: Change in channel client deposits payable (2)
(2.5)
(8.9)
3.1
(8.3)
Adjusted operating cash flow
$37.3
$7.7
$34.0
$79.0
Capital expenditures
(6.6)
(9.5)
(6.2)
(22.3)
Adjusted free cash flow
$30.8
($1.8 )
$27.7
$56.7
(1) Primarily includes cash payment of a $17.8 million legal settlement for the previously disclosed unfavorable arbitration ruling related to a 2014 contract between Kewill (a predecessor of BluJay), as well as other non-recurring costs.
(2) Channel Client Deposits Payable represents client deposits for the incentive payment program associated with the Company's channel shaping application. The Company offers services to administer incentive payments to partners on behalf of the Company’s clients. The Company’s clients deposit these funds into a restricted cash account with an offset included as a liability in incentive program payable in the Consolidated Balance Sheets
E2OPEN PARENT HOLDINGS, INC.
CONSOLIDATED CAPITAL
TABLE V
Fiscal Third Quarter 2024
Description
Shares (000's)
Notes
Shares outstanding as of November 30, 2023
304,388
Shares outstanding
Common Units
32,723
Units issued in the Business Combination that have not been converted from common units to Class A common stock (Common units are represented by Class V shares).
Series B-2 Shares (unvested)
3,372
Represents the right to acquire shares of Class A common stock when the 20-day VWAP reaches $15.00 per share.
Restricted Common Units Series 2 (unvested)
2,628
Represents the right in E2open Holdings, LLC that converts into common units when the 20-day VWAP reaches $15.00 . Upon conversion to common units, the holders can elect to convert the common units to Class A common stock.
Adjusted Basic Shares
343,111
Warrants
29,080
Outstanding warrants with an exercise price of $11.50 .
Options (vested/unreleased and unvested)
2,116
Options issued to management under the long-term incentive plan.
Restricted Shares (vested/unreleased and unvested)
13,702
Restricted shares issued to employees, management and directors under the long-term incentive plan.
Fully Converted Shares
388,009
View source version on businesswire.com: https://www.businesswire.com/news/home/20240109204369/en/
Investor Contact
Dusty Buell
dusty.buell@e2open.com
investor.relations@e2open.com
Media Contact
5W PR for e2open
e2open@5wpr.com
718-757-6144
Corporate Contact
Kristin Seigworth
VP Communications, e2open
kristin.seigworth@e2open.com
pr@e2open.com
Source: E2open Parent Holdings, Inc.
What is the ticker symbol for E2open Parent Holdings, Inc.?
The ticker symbol for E2open Parent Holdings, Inc. is ETWO.
What was the GAAP subscription revenue reported for the third quarter of 2024?
The GAAP subscription revenue reported for the third quarter of 2024 was $132.8 million.
What were the financial highlights of the fiscal third quarter?
The financial highlights included a decrease in total revenue and adjusted EBITDA for the third quarter of 2024.
What are the financial outlook and guidance for fiscal year 2024?
The company updated its full year 2024 guidance, with expected ranges for GAAP subscription revenue and total GAAP revenue.
When will E2open host its quarterly conference call?
E2open will host a conference call today at 5:00 p.m. ET to review fiscal third quarter 2024 financial results and discuss the outlook for the full fiscal year 2024.