E2open Parent Holdings, Inc. (NYSE:ETWO) Q1 2024 Earnings Call Transcript

The other thing that I’ll mention is that on the service business, we are giving up some of our services revenue to the system integrators as that part of our growth strategy starting to materialize. And then lastly, we are having additional subscription products that come with very low attach rates, mostly on the network side of our business. So those three things kind of in units and are affecting our services business for now, which is why we expect that to continue to decouple from our subscription growth rate going forward.

Adam Hotchkiss: Great. Really helpful. Thanks, Michael. Thanks, Marje.

Michael Farlekas: Thanks, Adam.

Operator: The next question comes from Taylor McGinnis with UBS. Please proceed.

Taylor McGinnis: Yeah. Hi. Thanks so much for taking my question. The first one I have is, I know, Greg hasn’t started yet, but just any high-level thoughts you can share on expectations you have for him in this new role. I know you’ve talked to, like last quarter, you talked about some of the sales disruption and some of the changes, it sounds like that you’ve made you’re starting to see some normalization there. But just curious if there is any future sales changes that you’re anticipating or anything on that front? And then the second part of this question is, Marje, just curious how this impacts or not your comfort level with the guidance on the top line and the margins?

Michael Farlekas: Yes. Taylor, thanks for the question. As we’ve kind of articulated, we built this business over the past almost a decade, now eight years around the idea of scaling rapidly. We did that with the business 10x and became very profitable company in doing so. We kind of centered our attention on operations as that was the necessary requirement for that part of our growth strategy, and our COO, and it was titled that way because it was operationally oriented. I think our — this part of multi-step plan and we’re kind of getting to the place where we want to be is that we really need to have a regular way organic sales-driven leader that has grown up in that part of the world and Greg brings all those attributes from his experiences and mostly around selling for large companies at scale less companies with $1.2 billion and really understanding how to build a scaled sales team that is on repeatable process and that’s kind of what’s necessary for us going forward.

So I think it’s just the next part of our process, super thrilled to have them and then really excited about the go forward in terms of that. In terms of next steps, we’ve been making these incremental steps along the way. So I don’t expect a rapid or dramatic shift, but just incremental improvement as we kind of build a very repeatable organic sales engine. Marje?

Marje Armstrong: Yeah, absolutely. Just to add to that in terms of the impact to our top line, again we’re reiterating our full year guidance, a lot of the changes that we’ve talked about, it’s all part of the plan for the year, right, and what’s contemplated when we set guidance. And in terms of the cost impact go same way, there is no change to guidance from this change we talked about incremental investments on the sales team and go-to-market overall, but nothing really to update, again, this is all part of the plan sort of for the year.

Taylor McGinnis: Awesome. Super helpful. And then my last question is, you talked about, when you think about the back half of the guidance or what’s implied for the full year on a sequential basis, it sounds like subscription revenue improving versus what we saw in 1Q, you talked about services revenue, sequential growth improving versus what we saw in 1Q. So just curious what you guys are seeing maybe from a bookings perspective or you talked about some large deals that closed in the quarter that I guess is giving you that comfort that we could see some recovery in those numbers?