E2open Parent Holdings, Inc. (NYSE:ETWO) Q1 2026 Earnings Call Transcript

E2open Parent Holdings, Inc. (NYSE:ETWO) Q1 2026 Earnings Call Transcript July 10, 2025

E2open Parent Holdings, Inc. beats earnings expectations. Reported EPS is $0.05, expectations were $0.04.

Operator: Greetings. Welcome to the E2open First Quarter Fiscal Year 2026 Earnings Call. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to your host, Russell Johnson, Head of Investor Relations. You may begin.

Russell Johnson:

SVP, Treasurer & Investor Relations: Good afternoon, everyone, and welcome to the E2open Fiscal First Quarter and Full Year 2026 Earnings Conference Call. Today’s call will include recorded comments from our Chief Executive Officer, Andrew Appel; and our Chief Financial Officer, Marje Armstrong. Due to E2open’s pending acquisition by WiseTech Global, as announced on May 25, 2025, we will not conduct a live Q&A session after today’s call or participate in individual post-call discussions with analysts and investors. In addition, we will not continue our past practice of providing quarterly guidance. We will, however, review our full year fiscal 2026 guidance. A replay and transcript of today’s call will be available on the company’s Investor Relations website at investors.e2open.com.

Information to access this replay is listed in today’s press release, which is also available on our Investor Relations website. Before we begin, I’d like to remind everyone that during today’s call, we will be making forward-looking statements regarding future events and financial performance, including full year fiscal 2026 and our pending acquisition by WiseTech Global. These forward-looking statements are subject to known and unknown risks and uncertainties. E2open cautions that these statements are not guarantees of future performance. We encourage you to review our most recent reports filed with the SEC, including our 10-K or any applicable amendments for a complete discussion of these factors and other risks that may affect our future results or the market price of our stock.

And finally, we are not obligating ourselves to revise our results or these forward-looking statements in light of new information or future events. Also during today’s call, we will refer to certain non-GAAP financial measures. Reconciliations of non-GAAP to GAAP measures and certain additional information are included in today’s earnings press release, which can be viewed and downloaded from our Investor Relations website at investors.e2open.com. And with that, we’ll begin by turning the call over to our CEO, Andrew Appel.

Q&A Session

Andrew M. Appel: Thank you, Russell, and thanks to everyone for joining today’s call. I’ll begin with some retrospective thoughts on what I see as the key accomplishments of our E2open team since I assumed the role of permanent CEO about 1.5 years ago. I’ll also share my perspective on the exciting new opportunities for our customers and employees presented by our company’s pending acquisition by WiseTech as announced in May. I’ll then ask Marje to review our Q1 FY ’26 results and our full year FY ’26 guidance. Over the last 1.5 years, our primary focus at E2open has been to put in place the operational and cultural foundation needed for E2open to return to organic growth. At the core of these efforts was the simple but powerful principle underlining the performance of all great companies that delighting your customers and ensuring they receive distinctive value from using your products and services is the key to long-term growth in a competitive market.

I’m pleased to say that our fiscal first quarter results, in particular, achieving the first year-over-year growth in subscription revenue since mid-FY ’24 are direct evidence of the progress we have made. Through the focused efforts and singular commitment of our global E2open teams across multiple functional areas, we have succeeded in stabilizing our business and putting it back on a growth trajectory. Nowhere is this progress more visible than in the area of client retention, where we have significantly improved our performance through better management and by prioritizing longer-term client partnerships over short-term gains. In addition to improved retention, we have also made notable enhancements over the last 1.5 years in both our software products and in the way in which we bring these products and associated services to market.

Driven by continued investment in R&D, we have launched exciting new products such as supply network discovery, released generative AI-driven tools to augment our industry-leading transportation management and global trade solutions and are on track for additional product announcements in the coming months. Thanks to this ongoing focus on innovation, execution and client satisfaction, our products continue to enjoy strong demand and market acceptance, and our unique software platform remains deeply embedded across the Fortune 1000 universe of companies that carry out a large share of global commerce. Our software platform performs mission-critical supply chain functions, enabling our clients to scale their business and outperform their peers despite an increasingly volatile and uncertain business environment.

And I continue to be impressed by the fact that each and every quarter, we win strategic new logo business and expand our high-value relationships with meaningful existing customers. Our client list is ultimately our most valuable asset, and I’m honored to say that so many leading global businesses continue to place their trust in E2open to meet their most complex supply chain needs. In summary, E2open’s business is now well positioned for the next chapter of our company’s evolution. As we announced in late May, we have agreed to become part of WiseTech Global, a company that, like E2open is widely recognized as a leader in the fast-growing market for supply chain and logistics software. I am tremendously excited that these two great companies will be coming together once we have completed the necessary filings and received all the required approvals.

In many ways, E2open and WiseTech are ideal partners with many common values that will underpin our future collaboration. We each bring a long and distinguished track record of serving clients, and we share a passion for software innovation that empowers our customers with highly differentiated capabilities. Traditionally, WiseTech’s focus has been on international freight forwarding and logistics and the breakthrough success they have achieved in those areas is well known throughout the industry. By combining with E2open, WiseTech will extend its traditional focus to include our company’s broad supply chain suite of planning, channel and supply applications. and also add highly complementary capabilities in adjacent areas of domestic logistics, carrier integration and global trade.

Following the combination, the new company will be uniquely positioned to serve a broader array of clients at all points of the value chain from sourcing to manufacturing, from order to fulfillment and from supplier through to end customer. Ultimately, the success of any new business venture will depend on the people behind it, and E2open’s pending combination with WiseTech is as much about people as it is about products. Based on my many conversations with our counterparts at WiseTech, I am confident they are acquiring E2open not only for the highly complementary software application, and network of connected enterprises, but also for our deep base of knowledgeable and highly experienced employees and our uniquely valuable customer base. They see immense value across our entire broad product line as well as in the global teams that develop and deliver our solutions and care for our customers.

They will rely on the expertise of E2open’s personnel as well as on the continued confidence and commitments of our many leading clients to reach our shared goal of becoming the operating system for global supply chains. I am confident that E2open’s employees will embrace this new opportunity with the same passion and energy that you have shown for E2open’s mission over the last several years. Additionally, I want to note that the process of completing the required filings and receiving U.S. regulatory approval needed for the acquisition to close is underway and on schedule. We still expect transaction to close by the end of this calendar year. Until then, of course, E2open and WiseTech will continue to operate as independent companies. As we work towards our close, our global team remains focused on the things that have made us successful, namely putting our clients’ needs first, delivering our software solutions flawlessly and growing our business.

In closing, as we make progress on joining together with WiseTech, I want to thank all of the stakeholders who have helped E2open reach this important milestone in our future development. our shareholders, our executive team and, of course, and most importantly, our employees and our clients. Exciting times for our company and our industry lie ahead, and we look forward to you joining us on this journey.

Marje Armstrong: Thank you, Andrew. Today, I will discuss our fiscal first quarter results and also review our full year FY ’26 guidance. Before doing so, I would like to extend my sincere gratitude to our E2open team members around the world for their unwavering commitment to E2open’s mission of delivering distinctive value to our clients. Your hard work and dedication have truly made a positive difference that resonates across our whole company. Now on to our reported results. Subscription revenue in the fiscal first quarter 2026 was $132.9 million, above the high end of our $129 million to $132 million guidance. On a year-over-year basis, subscription revenue grew 1.1% and 0.9% on a constant currency basis. Our return to subscription revenue growth in the first quarter was driven by progress on retention and bookings in the second half of FY ’25, which has continued in early FY ’26.

Professional services and other revenue in the fiscal first quarter was $19.7 million, a year-over-year decline of 0.1%. While we continue to see potential to grow our PS revenue as we move through the fiscal year, the flat year-over-year Q1 performance is another positive indication of recent stabilization in that business. Total revenue for the fiscal first quarter was $152.6 million, reflecting positive growth of 1.0% over the prior year quarter. Turning to gross profit. In the fiscal first quarter of 2026, our non-GAAP gross profit was $102.4 million, a 0.2% decrease year- over-year. Non-GAAP gross margin was 67.1% in Q1 versus 67.8% in the prior year quarter. Lower PS gross margin negatively impacted the Q1 consolidated figure, but as we expect PS margins to improve throughout the year, it will also translate into improved consolidated gross margin performance.

Turning to EBITDA. Our first quarter adjusted EBITDA was $52.2 million, a 34.2% margin compared to $50.7 million and 33.6% margin in the prior year quarter. We continue to be mindful of operational efficiency as we focus on repositioning our business for growth. Our OpEx spend was down year-over-year due to ongoing cost discipline in non-client-facing areas and further savings from optimizing our use of offshore R&D resources. Finishing up on profitability. Net loss for the fiscal first quarter of 2026 was $15.5 million compared to a net loss of $42.8 million from the year ago comparable period. Now turning to FY ’26 cash flow. Adjusted operating cash flow was $48.0 million in the fiscal first quarter, driven by strong customer collections and our continued focus on managing working capital efficiently.

We ended Q1 with $230.2 million of cash, an increase of $33 million from the fourth quarter and marking another quarter of very strong performance on cash generation. This completes my remarks on our fiscal Q1 financial results. At this point, I will turn to financial guidance for full year FY ’26. We are confirming all aspects of our full year FY ’26 guidance previously provided on April 29, 2025. We still expect subscription revenue to be in the range of $525 million to $535 million, representing a year-over-year growth rate of negative 1.0% to positive 1.0%. We still expect FY ’26 total revenue to be within the range of $600 million to $618 million, representing a year-over-year growth rate of negative 1.3% to positive 1.7%. We still expect FY ’26 gross profit margin to be within a range of 68% to 68.5%.

We still expect FY ’26 adjusted EBITDA to be within the range of $200 million to $210 million, implying an adjusted EBITDA margin of 33% to 34%. Regarding cash flow, we also still expect FY ’26 adjusted operating cash flow as a percentage of adjusted EBITDA to be roughly in line with FY ’25 and net leverage ratio to be approximately 3.8x at the end of this fiscal year. In conclusion, as we work to close the WiseTech transaction and start an exciting new chapter in E2open’s growth and development, our business is well positioned to be a strong contributor to the success of the combined company. We look forward to partnering with WiseTech to bring further innovation to the supply chain industry to create new levels of value for our many clients and to continue to provide a great place to work for our talented E2open employees.

I want to thank everyone for joining us today. This concludes our call.

Operator: This concludes today’s conference, and you may disconnect your lines at this time. Thank you for your participation.