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].

Core Viewpoint - E2open Parent Holdings, Inc. is experiencing a significant slowdown in business, with revenue growth stagnating in 2023, despite previous trading gains and a strategic review aimed at improving performance and efficiency [1][2] Financial Performance - Total revenue for Q1 was $151.2 million, down 5.6% year-over-year and approximately $7 million lower than the previous quarter [5] - Subscription revenue accounted for $131.4 million, a decrease of 2.6% from the same quarter last year, representing 86.9% of total revenue [5] - Gross profit fell to $72.7 million, an 8.5% decline from the prior year, with gross margin dipping to 48.1% from 49.6% [6] - The net loss on a GAAP basis was $42.8 million, an improvement from a loss of $360.9 million the previous year [6] - Adjusted EBITDA decreased to $50.7 million, down 5.7% year-over-year, with an adjusted EBITDA margin of 33.6% [6] Future Guidance - For fiscal 2025, subscription revenue is expected to be between $532 million and $542 million, indicating flat growth year-over-year at the midpoint [7] - Total revenue guidance is set at $630 million to $645 million, reflecting a 0.5% growth at the midpoint [7] - Q2 2025 subscription revenue is projected to be between $129 million and $132 million, indicating a negative 3.1% decline at the midpoint, which is lower than market expectations due to delayed deal closures [7]

Financial Data and Key Metrics Changes - Total revenue for the fiscal first quarter was $151.2 million, a decline of 5.6% over the prior-year quarter [28] - Subscription revenue in Q1 was $131.4 million, a decline of 2.6% year-over-year, but at the midpoint of guidance [68] - Adjusted EBITDA for Q1 was $50.7 million, maintaining a 33.6% margin, consistent with the prior-year quarter [45] - Non-GAAP gross profit was $102.6 million, reflecting a 7.1% decrease year-over-year, with a gross margin of 67.8% [69] Business Line Data and Key Metrics Changes - Professional services and other revenue in Q1 was $19.8 million, reflecting a year-over-year decline of 21.6% due to resource reallocation [44] - The company expects professional services revenue for FY '25 to be roughly flat to the prior year, supported by a healthy backlog [44] Market Data and Key Metrics Changes - The company is experiencing robust demand for software applications that automate customs documentation and reduce compliance risks, driven by rising transportation costs and regulatory complexity [5] - The company has secured significant wins in global trade management and transportation management, indicating strong market positioning [5] Company Strategy and Development Direction - The company is focused on repositioning for sustainable organic growth by emphasizing client centricity and delivering differentiated solutions [7] - A strategic review is ongoing, with expectations to share outcomes with stakeholders soon [21] - The company aims to improve client satisfaction and retention metrics, which are critical for future growth [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a material sequential improvement in churn and bookings as the year progresses [18] - The company anticipates that the first quarter represented the peak of churn, with expectations for improvement in the second half of the fiscal year [36] - Management is optimistic about the potential for strong sustainable growth, supported by a disciplined approach to client engagement and retention [33] Other Important Information - The company ended Q1 with $160.2 million in cash and cash equivalents, an increase of $40.7 million year-over-year [47] - The company expects FY '25 subscription revenue in the range of $532 million to $542 million, with total revenue expected between $630 million and $645 million [10] Q&A Session Summary Question: What gives confidence on churn improvement throughout the year? - Management reviewed over 400 accounts individually and implemented a proactive model for managing renewals, leading to increased confidence in churn improvement [79] Question: Can you elaborate on the resource reallocation away from professional services? - The decision was made to invest in client satisfaction, which resulted in positive outcomes such as contract extensions and additional product sales [80] Question: What are the expectations for deal closure delays? - Management does not expect systemic issues causing deal delays, attributing them to client decision cycles and emphasizing improved engagement with clients [82] Question: How does the company view the competitive landscape with recent acquisitions in the industry? - Management believes the market demand for multi-tier supplier collaboration is robust, and the company is well-positioned to capitalize on growth opportunities [93][94]

Core Insights - E2open has outperformed the market with a 6.2% increase since the beginning of the year, contrasting with the S&P 500's decline of 87.9% [5] - The company's recent quarterly earnings of $0.04 per share missed the Zacks Consensus Estimate of $0.05 per share, representing a -20% earnings surprise [2] - E2open's revenues for the quarter ended May 2024 were $151.16 million, falling short of the Zacks Consensus Estimate by 2.78% and down from $160.12 million year-over-year [3] Earnings Performance - Over the last four quarters, E2open has surpassed consensus EPS estimates only once [3] - The current consensus EPS estimate for the upcoming quarter is $0.05, with expected revenues of $156.96 million, and for the current fiscal year, the estimate is $0.19 on revenues of $637.58 million [9] Industry Context - E2open belongs to the Zacks Internet - Software industry, which is currently ranked in the top 36% of over 250 Zacks industries, indicating a favorable industry outlook [1] - The correlation between near-term stock movements and earnings estimate revisions is strong, suggesting that tracking these revisions can provide insights into stock performance [7] Future Outlook - The sustainability of E2open's stock price movement will largely depend on management's commentary during the earnings call [4] - The estimate revisions trend for E2open is currently mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [8]

Stock and Equity Information - As of May 31, 2024, the company had 3,372,184 shares of Series B-2 common stock outstanding, which will convert to Class A Common Stock if the 20-day VWAP reaches at least $15.00 per share[116] - Unvested performance-based options totaled 3,922,079 with an unrecognized compensation cost of $10.6 million as of May 31, 2024[167] - Unvested performance-based RSUs totaled 3,981,528 with an unrecognized compensation cost of $68.1 million as of May 31, 2024[169] - Series 2 RCUs outstanding were 2,627,724 as of May 31, 2024, vesting upon meeting specific stock price or change of control conditions[142] - Common Units held by participants of E2open Holdings totaled 30.9 million as of May 31, 2024[158] Financial Liabilities and Debt - Outstanding 2021 Term Loan was $1,064.5 million as of May 31, 2024, with an interest rate of 8.94% based on SOFR plus 350 basis points[140] - Available borrowing capacity under the 2021 Revolving Credit Facility was $155.0 million as of May 31, 2024[140] - The adjusted SOFR Rate for a one-month interest rate loan is SOFR plus 0.11448%[139] Revenue and Performance Obligations - Total deferred revenue decreased from $215.2 million in February 2024 to $188.8 million in May 2024, with $90.9 million recognized during the three months ended May 31, 2024[129] - Revenue from remaining performance obligations was $869.6 million as of May 31, 2024, expected to be recognized within the next five years[153] - Total revenue for the Americas was $128.6 million in 2024, a decrease from $135.5 million in 2023[152] Assets and Liabilities - The fair value of asset-backed securities increased from $207,000 in February 2024 to $208,000 in May 2024[119][120] - The fair value of contingent consideration increased from $18,028,000 in February 2024 to $20,308,000 in May 2024[120][121] - The company's total accounts payable and accrued liabilities decreased from $90,594,000 in February 2024 to $85,112,000 in May 2024[135] - The company's warrant liability decreased from $14,713,000 in February 2024 to $10,952,000 in May 2024[120] - The company's total assets increased from $2,083,000 in February 2024 to $2,514,000 in May 2024[120] - The company's total liabilities decreased from $83,739,000 in February 2024 to $86,253,000 in May 2024[120] Tax and Compensation - The company's Tax Receivable Agreement liability under ASC 805 increased by $4.0 million during the three months ended May 31, 2024[137] - Capitalized sales commissions totaled $22.5 million as of May 31, 2024, included in prepaid expenses and other current assets[154] Dividends - The company has not paid any dividends and does not expect to pay dividends in the future[117]

www.e2open.com Press Release E2open Announces Fiscal 2025 First Quarter Financial Results GAAP subscription revenue of $131.4 million within Q1 FY25 guidance range Strong cash flow generation in Q1 FY25 AUSTIN, Texas – July 10, 2024 – E2open Parent Holdings, Inc. (NYSE: ETWO) ("e2open" or the "Company"), the connected supply chain SaaS platform with the largest multi-enterprise network, today announced financial results for its fiscal first quarter ended May 31, 2024. "During the fiscal first quarter, e2ope ...