E2open(US:ETWO)2023-10-11 00:52Financial Data and Key Metrics Changes - Total revenue for the fiscal second quarter was $158.5 million, reflecting organic growth of negative 1.4% over the prior year quarter [13] - Professional services and other revenue in the fiscal second quarter was $23.8 million, reflecting an organic growth rate of negative 18.2% [12] - Adjusted EBITDA for the second quarter was $56.1 million, an increase of 16.1% compared to $48.3 million in the prior year quarter [57] - Gross profit was $109.5 million, reflecting a 2.5% increase on an organic basis, with a gross margin of 69.1% compared to 66.5% in the prior-year quarter [85] Business Line Data and Key Metrics Changes - Subscription revenue was $134.7 million, representing 85% of total revenue, with a year-over-year growth rate of 2.4% [43] - The company experienced weaker sales of new unattached professional services projects and lower attached services from new subscription bookings [44] Market Data and Key Metrics Changes - The company noted continued weakness in end markets, particularly in technology and transportation sectors, impacting overall performance [66] - The company is taking a more conservative view on second-half churn, expecting improvement compared to the first half but acknowledging ongoing macro pressures [30] Company Strategy and Development Direction - The company is focused on transforming its sales organization to create a repeatable and scalable go-to-market motion [11] - A new Global Client Experience Organization has been established to enhance customer satisfaction and engagement [25] - The company aims to maintain an efficient cost structure while investing in growth initiatives [28] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that changes in the sales organization have led to disruptions, impacting top-line performance [18] - The company is committed to improving customer engagement and sales execution, with a focus on long-term growth [63] - Management expressed confidence in the company's growth potential and the unique advantages it holds in the supply chain software market [91] Other Important Information - The company is updating its full-year guidance, now expecting subscription revenue to be in the range of $530 million to $538 million for FY '24 [60] - The net loss for the fiscal second quarter was $38.6 million, which included a $17.8 million non-recurring expense related to an arbitration ruling [86] Q&A Session Summary Question: What changed at the end of the quarter to drive the bookings weakness? - Management indicated that the bookings weakness was due to a combination of macroeconomic factors and internal challenges related to sales account coverage changes [65][66] Question: Does the calculus around the trade-off between growth and profitability change? - Management stated that the focus remains on investing in the sales team and go-to-market motion while finding efficiencies across other areas [68][69] Question: Can you provide an update on leadership changes? - Management confirmed that significant changes have been made, including the appointment of a new Interim CEO and ongoing evaluations within the go-to-market organization [74][75] Question: What is the source of the churn being seen in the business? - Management noted that churn is primarily driven by macro pressures on freight volumes and higher churn in smaller customer accounts, with actions being taken to address these issues [77][78] Question: Have any of the delayed deals been lost to competitors? - Management indicated that while some deals have been lost, the reasons remain consistent and are not significantly different from previous periods [102][103]