E2open(US:ETWO)2022-07-11 23:52Financial Data and Key Metrics Changes - In Q1 FY 2023, the company generated over $160 million in total revenue, with $130 million from subscription revenue, which represents over 80% of total revenue and produces approximately 80% gross margin [10][11] - Organic subscription revenue grew over 12% on a constant currency basis compared to the previous year, marking an acceleration in organic subscription growth for five of the six quarters since going public [10][11] - Adjusted EBITDA was $51 million, up 12% year-over-year, representing a 31% EBITDA margin, with unlevered free cash flow exceeding $41 million, equating to 80% of EBITDA and 25% of total revenue [11][53] Business Line Data and Key Metrics Changes - Subscription revenue for Q1 was reported at $129.5 million, reflecting an organic growth rate of 10.7% on a pro forma basis or 12.1% on a constant currency basis [48] - Professional services and other revenue was $30.8 million, with an organic growth rate of 6.3% on a pro forma basis or 8.2% on a constant currency basis [50] - Total revenue for Q1 was $160.4 million, reflecting a total organic revenue growth rate of 9.8% on a pro forma basis or 11.4% on a constant currency basis [51] Market Data and Key Metrics Changes - The company noted a slowdown in international and domestic transportation volumes, indicating a broader economic slowdown [13] - The strengthening U.S. dollar created a currency headwind for the company's top line, although the impact on revenues was less than 2% for the current fiscal year [46][47] - The company is experiencing decision delays and project slowdowns primarily from Europe and some large technology clients, but these are not seen as a trend [18][19] Company Strategy and Development Direction - The company is focused on organic subscription growth by expanding within its client base while adding new logos, with 70% of bookings coming from existing clients [21][24] - E2open aims to capitalize on the fragmented supply chain software market by providing an integrated end-to-end solution, contrasting with smaller point solution providers [23] - The growth strategy includes expanding strategic partnerships and pursuing inorganic product extensions through M&A to increase total addressable market (TAM) [24][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to grow profitably despite macroeconomic challenges, emphasizing the predictability of subscription revenue [20][41] - The company is closely monitoring the impact of macroeconomic conditions on its pipeline, close rates, and sales cycle length, particularly in the Euro area and tech sector [61] - Management remains optimistic about the future, citing strong demand and a solid client base as key factors for continued growth [22][41] Other Important Information - The company launched a brand refresh to increase awareness and assert itself as a platform of choice for leading companies [36][37] - E2open was recognized by Gartner as a leader in the 2022 Magic Quadrant for Multienterprise Supply Chain Business Networks [39] - The integration of recent acquisitions, including BluJay and Logistyx, is progressing well, with significant synergies expected [55] Q&A Session Summary Question: Can you provide the full year guidance for subscription revenue and total revenue? - The company adjusted its guidance to account for foreign exchange impacts, with a $7 million impact on subscription revenues and a $9 million impact on total revenues [76][77] Question: Did the macro environment impact bookings and billings? - The company observed select deals closing slower, particularly in the Euro area and tech sector, but these impacts are factored into the guidance [79] Question: What is the contribution of Logistyx in the quarter? - The company is still early in the integration of Logistyx and will provide updates as more information becomes available [83] Question: How does the company view capital allocation and appetite for M&A? - The company is closely monitoring capital markets and sees opportunities for strategic and financially accretive M&A, while also considering its leverage position [91][92] Question: Why is the company still ramping up its go-to-market hiring despite decision delays? - The company believes in balancing profitability and growth, and sees enough evidence of progression to continue its investments [96] Question: Are win rates improving with the broader E2open platform? - The company tracks win rates closely and has seen consistent growth in its pipeline, with high win rates when articulating the need for its platform [99][100]