Group 1 - The core recommendation is a buy rating for E2open Parent Holdings (NYSE: ETWO) based on the belief that the growth slowdown in 1Q25 is not due to structural reasons [1] - The investment is considered ideal if it operates in a sector projected to experience organic growth exceeding GDP growth over the next 5-10 years [1] - The company should have sustainable competitive advantages that lead to attractive unit economics [1] Group 2 - The investment should be managed by competent, ethical, and long-term thinkers [1] - A fair valuation is essential for the investment to be considered ideal [1]

Financial Performance - E2open Parent Holdings, Inc. (NYSE: ETWO) reported an EPS of -$0.10, missing expectations by $0.02 [1] - The company's revenue was $152.19 million, falling short by $2.62 million and down 3.97% year-over-year [1] Investment Focus - The mission of Grassroots Trading emphasizes providing objective and unbiased research, focusing on small- to mid-cap companies, and identifying potential opportunities in larger companies [1]

Financial Data and Key Metrics Changes - Subscription revenue for Q2 2025 was $131.6 million, a decline of 2.3% year-over-year, but an improvement from Q1's decline [31] - Total revenue for Q2 was $152.2 million, representing a 4.0% decrease compared to the prior year [31] - Non-GAAP gross profit was $105.0 million, a 4.1% decrease year-over-year, with a gross margin of 69.0% [32] - Adjusted EBITDA for Q2 was $54.9 million, with a margin of 36.1%, compared to $56.1 million and 35.4% margin in the prior year [32] - Adjusted operating cash flow was negative $5.5 million for Q2, with a year-to-date adjusted operating cash flow of $33.6 million [34] Business Line Data and Key Metrics Changes - Professional services revenue for Q2 was $20.6 million, a year-over-year decline of 13.1%, below expectations [31] - Subscription bookings increased year-over-year and sequentially, indicating positive progress despite delays in large deals [6][19] Market Data and Key Metrics Changes - The company noted strong market demand for supply chain software, particularly in logistics, global trade, and supply chain orchestration [19][21] - The company hosted a successful Connect 2024 conference, indicating a shift in client focus towards core vision and innovation [9][10] Company Strategy and Development Direction - The company is focused on improving client retention and satisfaction, with a goal of reducing churn and increasing long-term partnerships [11][13] - A strategic review is ongoing, led by the Board of Directors, to evaluate options for the company's future [18] - The company aims to enhance sales productivity and pipeline growth to accelerate commercial momentum [7][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operational changes and cultural shifts within the company, which are expected to drive higher bookings and retention [5][17] - The company is taking a conservative view on full-year bookings and revenue due to longer deal cycles, but remains optimistic about future growth [17][39] Other Important Information - The company is implementing a defined cost reduction plan and focusing on operational efficiencies to improve margins [33][37] - The company expects to generate strong positive adjusted operating cash flow in FY '25, despite a lower revenue outlook [38] Q&A Session Summary Question: How did Q2 deal delays compare to Q1? - Management noted that while there were delays, Q2 showed improvement over Q1 in terms of bookings and churn, but not to the expected degree [41][42] Question: What is the outlook for SAP customers? - There is increased demand from clients undergoing ERP upgrades, creating opportunities for the company to engage and provide value [43][44] Question: What are the expectations from systems integrators? - The company is focusing on partnerships with systems integrators to drive transformation and growth, rather than just implementation support [49][50] Question: What is driving the professional services revenue outlook? - The volatility in professional services revenue is attributed to the timing of large projects and the need for operational improvements [52][53] Question: What are the strongest areas of new bookings? - The company is seeing strong demand in logistics and global trade management, reflecting its competitive differentiation in these markets [66]

Group 1: Earnings Performance - E2open reported quarterly earnings of $0.05 per share, matching the Zacks Consensus Estimate, and an increase from $0.04 per share a year ago [1] - The company had a surprise of -20% in the previous quarter, where it was expected to post earnings of $0.05 but only delivered $0.04 [1] - Over the last four quarters, E2open has surpassed consensus EPS estimates only once [1] Group 2: Revenue Performance - E2open's revenues for the quarter ended August 2024 were $152.19 million, missing the Zacks Consensus Estimate by 0.09%, and down from $158.49 million year-over-year [2] - The company has topped consensus revenue estimates just once over the last four quarters [2] Group 3: Stock Performance and Outlook - E2open shares have declined approximately 8.7% since the beginning of the year, while the S&P 500 has gained 20.6% [3] - The future stock performance will largely depend on management's commentary during the earnings call and the earnings outlook [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.06 on revenues of $161.18 million, and for the current fiscal year, it is $0.20 on revenues of $635.04 million [7] Group 4: Industry Context - The Internet - Software industry, to which E2open belongs, is currently ranked in the top 29% of over 250 Zacks industries, indicating a favorable outlook [8] - Research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8]

Core Viewpoint - E2open Parent Holdings Inc reported fiscal Q2 2025 results that fell short of analyst expectations, highlighting challenges in revenue growth and deal closures while maintaining a focus on client retention and operational efficiency [1][2][6]. Company Overview - E2open is a leading provider of cloud-based supply chain management solutions, integrating networks, data, and applications to optimize operations across logistics, trade, and manufacturing [2]. Performance and Challenges - The company achieved sequential improvement in client retention but faced delays in closing large deals due to extended client decision timelines, impacting growth potential [2][6]. Financial Achievements - GAAP subscription revenue for Q2 FY25 was $131.6 million, accounting for 86.5% of total revenue, despite a 2.3% decrease from the previous year [3]. - Adjusted EBITDA margin improved to 36.1% from 35.4% year-over-year, indicating effective cost management [3]. Key Financial Details - GAAP gross profit for the quarter was $74.6 million, with a gross margin of 49.0%, while non-GAAP gross profit was $105.0 million, reflecting a margin of 69.0% [4]. Income Statement Highlights - Total revenue for Q2 FY25 was $152.2 million, down 4.0% from $158.5 million in Q2 FY24 - GAAP net loss decreased to $32.9 million from $38.6 million, a reduction of 14.8% - Adjusted EBITDA was $54.9 million, down 2.2% from $56.1 million in the prior year [5]. Balance Sheet and Cash Flow - As of August 31, 2024, total assets were reported at $3.03 billion, with cash and cash equivalents of $142.2 million and total liabilities of $1.49 billion, indicating a stable financial position [5]. Analysis and Outlook - E2open's Q2 FY25 performance reflects both achievements in client retention and challenges in revenue growth and deal closures - The company has adjusted its revenue guidance for FY25, anticipating GAAP subscription revenue between $526 million and $532 million, while focusing on building revenue momentum [6].

Investors interested in Internet - Software stocks are likely familiar with E2open Parent Holdings, Inc. (ETWO) and Informatica Inc. (INFA) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look. There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes comp ...

Investors interested in Internet - Software stocks are likely familiar with E2open Parent Holdings, Inc. (ETWO) and Paycor HCM, Inc. (PYCR) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look. There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasiz ...

Core Viewpoint - The company maintains a buy rating for E2open Parent Holdings (ETWO), despite a disappointing growth slowdown in 1Q25, attributing it to timing issues rather than structural weaknesses [5][10]. Financial Performance - ETWO reported total GAAP revenue of $151.2 million, with subscription revenue at $131.4 million and professional services revenue at $19.8 million, missing consensus expectations of $155.1 million [6]. - Adjusted gross profit was $102.6 million, below the consensus of $107.9 million, leading to a decline in adjusted EBITDA by 5.8% to $50.7 million [6]. - Adjusted net income decreased from $15.9 million to $13 million, indicating a negative growth trend [6]. Growth Outlook - The growth slowdown in 1Q25 was primarily due to delayed deals and longer customer approval processes, with nearly half of the pushed-out deals already closed [6][10]. - Subscription billings remained stable at around $540 million over the last twelve months, and current deferred revenue grew by 390 basis points in 1Q25, suggesting a potential growth inflection point is near [7][8]. - The company has redirected resources to enhance implementations for existing customers, which is expected to facilitate faster revenue recognition [8]. Market Sentiment - Despite the market's negative reaction to the 1Q25 results, the company believes the growth outlook remains positive, with leading indicators suggesting a turnaround in growth soon [8][10]. - The company anticipates that ETWO's multiples could increase as growth turns positive, potentially returning to a trading level of 2.4x, with further recovery to 3x as growth accelerates [8].

Core Insights - E2open Parent Holdings, Inc. (ETWO) has a Zacks Rank of 2 (Buy), indicating an improving earnings outlook, while Informatica Inc. (INFA) has a Zacks Rank of 3 (Hold) [1] - ETWO is considered a superior value option compared to INFA based on various valuation metrics [4] Valuation Metrics - ETWO has a P/B ratio of 0.89, significantly lower than INFA's P/B ratio of 3.66, suggesting ETWO is undervalued relative to its book value [3] - The forward P/E ratio for ETWO is 21.79, while INFA's forward P/E is higher at 25.29, indicating ETWO may offer better value [7] - ETWO's PEG ratio is 1.31, compared to INFA's PEG ratio of 3.28, further supporting ETWO's favorable valuation [7] Value Grades - ETWO has a Value grade of B, while INFA has a Value grade of D, reflecting ETWO's stronger position in terms of value metrics [8]

Core Viewpoint - E2open Parent Holdings experienced a decline in both revenue and net income in its fiscal first quarter of 2025, leading to a significant drop in its stock price, which fell nearly 7% on the day of the earnings release [2][3]. Financial Performance - Revenue for the fiscal first quarter of 2025 was reported at just over $151 million, down from $160 million in the same quarter of 2024, indicating a year-over-year decline [2]. - Non-GAAP net income for the quarter was $13 million, or $0.04 per share, compared to nearly $16 million in the previous year [2]. - E2open met the average analyst estimate for profitability but fell short on revenue expectations, which were slightly over $155 million [7]. Guidance and Strategy - The company reiterated its subscription and total revenue guidance for fiscal 2025, projecting overall revenue between $630 million and $645 million, aligning with the consensus analyst estimate of just over $637 million [4]. - Foundational subscription revenue is forecasted to be between $532 million and $542 million, indicating essentially flat year-over-year growth [6]. - E2open acknowledged challenges during the quarter, including "temporary deal closure delays," but stated it is making progress on its long-term growth strategy [4].