E2open Inc (EOPN)’s Third Quarter Fiscal 2015 Financial Results Conference Call Transcript

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Operating loss is expected to be 6.6 to 6.1 million dollars. Leading to a non-GAAP EPS loss of $.22 to $.20, based on a diluted share count of 31.6 million. Adjusted EBITDA is expected to be a loss of 6.1 to 5.6 million. For the full fiscal year 2015, we now expect new and up sale subscriptions in support bookings of 71 to 75 million. We expect revenue of 80.5 to 81 million. Operating loss is expected to be 18.1 to 17.6 million, leading to a non-GAAP EPS loss of $.63 to $.61, based on a diluted share count of 30.5 million. We also expect adjusted EBITDA to be a loss of 15.7 to 15.2 million. Finally our free cash flow is expected to be -15.5 to $-14.5 million. I also wanted to provide a few high-level comments, on our fiscal 2016 plans.

We’re still finalizing our operating plan for next year, but the extended timing of the bookings discussed early, will impact the revenue growth in fiscal 2016. Also as Mark mentioned earlier we’re pulling for the estimated adjusted EBITDA breakeven point, into the fourth quarter of fiscal 2016. We will be making further cost adjustments in the beginning of the fiscal year, to support this target. In summary while our reported numbers came in at or above our prior guidance, recent sales execution challenges are driving lower projections for the balance of the year. We’ve taken steps to address these issues will be working diligently to capitalize on our large market opportunity in the coming periods.
And now we’ll be happy to take your questions.

Mark Woodward
This is Mark. Before we get into the Q&A, I would like to expand on a few things first. We’re clearly not satisfied by with our performance, and I am personally not used to it and everyone on the E2 investors’ team considers it to be unacceptable. We need to be more consistent and more predictable with our results. At the end of the day, it’s all about results. We’ve had a number of things affect the results this year, some that are out of our control such that the abnormal number of customers that were required. Some things were clearly within our control, such as sales execution. In terms of bookings, we started the year with the Q1 that was right in line with expectations. Q2 wasn’t far off, though this is always our season’s lowest quarter. We expect to, in the past, always have made up for that in Q3 and Q4.

Well Q3 wasn’t a bad booking quarter it wasn’t good enough to make up for Q2 and Q4 forecast doesn’t fill the gaps. That being said this won’t be a bad bookings year. The midpoint booking guide to 73 million print doing up self-description support we weren’t paying 30% over last year where we experienced explosive growth of 79%. If you look at our booking growth rates last two years without shelling it growth rates would have been 47% for last year, and the mid-20s for this year.

I pointed that out, because we look vacation for bookings growth will not meet our original projections. This is by no means a dramatic slowdown in our business. Lastly, but very importantly, we’ve been diligent about being more operationally efficient, across the board. While revenue expectations have been reduced for Q4, we have not materially changed our aspects of bottom line. In addition, right now, charging to pull in our breakeven point and planning to be adjusted breakeven by Q4 of fiscal 2016, even on a reduced revenue outlook.

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