E2open Announces Fiscal 2023 Fourth Quarter and Full Year Financial Results

FY2023 GAAP subscription revenue of $532.9 million, an increase of 58.8% year-over-year; 9.8% organic subscription revenue growth on a constant currency basis

FY2023 GAAP operating cash flow of $68M and adjusted operating cash flow of $105M

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 fourth quarter and full year ended February 28, 2023.

“In fiscal year 2023, e2open achieved solid revenue growth and strong profitability, despite macro headwinds that impacted our top-line performance as we finished out the fiscal year,” said Michael Farlekas, e2open CEO. “Of note is that large deals won during the quarter spanned multiple application families, continuing the trend we see that large wins are solutions with more than one application. We are demonstrating the differentiated value of e2open’s platform offering adjacent, connected supply chain applications supported by our network of over 420,000 companies.”

“Looking forward to fiscal year 2024, we are focused on developing critical client and partner relationships that will enable us to drive future revenue growth while continuing to drive operating leverage, profitability and cash flow,” said Farlekas. “In a world where flexible and responsive supply chains are fundamental to our client’s success, we look forward to working with our clients to deliver innovations that improve their supply chains.”

Fiscal Fourth Quarter 2023 Financial Highlights

• Revenue
  • GAAP subscription revenue for the fourth quarter of 2023 was $136.9 million, an increase of 18.2% from the year-ago comparable period and 82.3% of total revenue. Organic subscription revenue growth was 5.4% and 6.6% on a constant currency basis.
  • Total GAAP revenue for the fourth quarter of 2023 was $166.3 million, an increase of 15.3% from the year-ago comparable period. Total organic revenue growth was 3.0% and 4.3% on a constant currency basis.
• GAAP gross profit for the fourth quarter of 2023 was $87.0 million, an increase of 21.4% from the year-ago comparable period. Non-GAAP gross profit was $116.6 million, up 3.5% and 4.1% on a constant currency basis.
• GAAP gross margin for the fourth quarter of 2023 was 52.3% compared to 49.7% from the year-ago comparable period. Non-GAAP gross margin was 70.2% and 69.8% on a constant currency basis compared to 69.9% from the year-ago comparable period.
• Net loss for the fourth quarter of 2023 was $303.5 million compared to a net income of $67.7 million from the year-ago comparable period. Adjusted EBITDA for the fourth quarter of 2023 was $61.2 million, an increase of 13.2% and 11.7% on a constant currency basis from the year-ago comparable period. Adjusted EBITDA margin was 36.8% and 35.9% on a constant currency basis versus 33.5% from the comparable year-ago period. The fourth quarter of 2023 adjusted EBITDA includes an approximate $5 million of previously disclosed strategic investments in marketing, sales, and systems integrators partnerships that e2open did not have in the comparable year-ago period.
• GAAP EPS for the fourth quarter of 2023 was a loss of $0.90. Adjusted EPS for the fourth quarter of 2023 was $0.07.

Fiscal Year 2023 Financial Highlights

• Revenue
  • GAAP subscription revenue for fiscal 2023 was $532.9 million, an increase of 58.8% compared to the prior fiscal year and 81.7% of total revenue. Organic subscription revenue growth was 8.1% and 9.8% on a constant currency basis.
  • Total GAAP revenue for fiscal 2023 was $652.2 million, an increase of 53.3% compared to the prior fiscal year. Total organic revenue growth was 5.9% and 7.7% on a constant currency basis.
• GAAP gross profit for fiscal 2023 was $330.3 million, an increase of 63.0% compared to the prior fiscal year. Non-GAAP gross profit was $448.3 million, up 4.6% and 5.7% on a constant currency basis.
• GAAP gross margin for fiscal 2023 was 50.6% compared to 47.6% in the prior fiscal year. Non-GAAP gross margin was 68.7% and 68.3% on a constant currency basis compared to 69.6% in the prior fiscal year.
• Net loss for fiscal 2023 was $720.2 million compared to $189.9 million in the prior fiscal year. Adjusted EBITDA for fiscal 2023 was $217.1 million, an increase of 10.7% and 8.8% on a constant currency basis compared to the prior fiscal year. Adjusted EBITDA margin was 33.3% and 32.2% on a constant currency basis versus 31.8% in the prior fiscal year. The fiscal 2023 adjusted EBITDA includes an approximate $19 million of previously disclosed strategic investments in marketing, sales, and systems integrators partnerships that e2open did not have in the comparable year-ago period.
• GAAP EPS for fiscal 2023 was a loss of $2.15. Adjusted EPS for fiscal 2023 was $0.25.
• GAAP cash flow from operations for fiscal 2023 was $68.1 million compared to $51.2 million from the year-ago comparable period, inclusive of M&A-related expenses. Adjusted cash flow from operations for fiscal 2023 was $104.8 million, exclusive of M&A-related expenses.

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 cash flow from operations and adjusted EBITDA. Prior year comparisons of non-GAAP measures include e2open and Logistyx, as if Logistyx were acquired on March 1, 2021.

Recent Business Highlights

• A publicly traded American multinational conglomerate went live on e2open’s Channel Application Suite, to provide visibility into its sales channel including point-of-sale and inventory data and trends.
• One of the world’s largest CPG companies concluded the rollout of e2open’s Supply Application Suite, to manage the entire inbound order cycle, fully integrated with its ERP solution. The solution brings efficiency to the client’s sourcing, planning, warehousing, and manufacturing operations.
• A global provider of technology products, services, and solutions selected e2open for Global Trade Management to ensure compliance with classification, screening, and export license management. E2open was selected for its extensive global coverage and ability to automate manual processes, reducing compliance exposure and associated costs.
• E2open’s quarterly technology update included enhancements across the platform to boost performance and productivity, realize cost savings, and improve time-to-value for clients, while ensuring environmental, social, and governance improvements.

Financial Outlook for Fiscal Year 2024

As of May 1, 2023, e2open is providing updated guidance for fiscal year 2024, which ends February 29, 2024, as follows:

Fiscal 2024 Subscription GAAP Revenue

• GAAP subscription revenue for fiscal 2024 is expected to be in the range of $545 million to $555 million, reflecting a 3.2% 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 $655 million to $670 million, reflecting a 1.6% organic growth rate at the mid-point.

Fiscal First Quarter 2024 GAAP Subscription Revenue

• GAAP subscription revenue for the fiscal first quarter of 2024 is expected to be in the range of $131 million to $134 million, reflecting a 2.3% organic growth rate at the mid-point.

Fiscal 2024 Non-GAAP Gross Profit Margin

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

Fiscal 2024 Adjusted EBITDA

• Adjusted EBITDA for fiscal 2024 is expected to be in the range of $218 million to $228 million, reflecting an implied adjusted EBITDA margin in the range of 33% to 34%.

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 fourth quarter and full fiscal year 2023 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 668340. 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 May 15, 2023, at 877-481-4010 (domestic) or 919-882-2331 (international). The replay pass code is 47843. 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.

Presentation slides to accompany the conference call are available for download under “Events & Presentations” in the “Investors” 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 420,000 manufacturing, logistics, channel, and distribution partners as one multi-enterprise network tracking over 13 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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