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EP

E2open Parent Holdings, Inc. (ETWO)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 FY25: Total GAAP revenue $151.7M (-3.7% YoY), GAAP subscription revenue $132.0M (-0.6% YoY, 87.0% of total), Adjusted EBITDA $53.6M (35.3% margin), Adjusted EPS $0.05; GAAP net loss was $381.6M driven by a $369.1M goodwill impairment and a $10.0M intangible impairment .
  • Subscription revenue landed above the mid-point of guidance; management cited improved retention and cross-sell momentum as key supports, while professional services (PS) revenue was pressured by deal timing and mix .
  • Guidance: FY25 subscription revenue narrowed to $526–$529M (from $526–$532M) mainly due to USD strengthening; FY25 total GAAP revenue narrowed to $607–$611M; FY25 Adjusted EBITDA maintained at ~$215M (~35% margin). New Q4 FY25 subscription revenue guidance: $131–$134M .
  • Stock narrative catalysts: improved retention and bookings, continued strategic review, expanding AI/product roadmap, and guidance narrowed on FX headwinds; goodwill impairment is a non-cash drag on GAAP results but does not alter cash generation or Adjusted EBITDA trajectory .

What Went Well and What Went Wrong

What Went Well

  • Retention improved and management believes the company is “past peak churn,” stabilizing the subscription base; Q3 subscription revenue was above guidance mid-point .
  • Strong cross-sell and new logo wins in Q3 (global retailer cross-sell; major industrial and consumer retail wins), plus IDC recognition as a Leader in multiple planning MarketScapes, validating product competitiveness .
  • Operating discipline preserved margins and cash generation: Adjusted EBITDA $53.6M (35.3%), Adjusted operating cash flow $21.1M, Adjusted free cash flow $14.9M in Q3 .

What Went Wrong

  • GAAP net loss of $381.6M due to a $369.1M goodwill impairment and $10.0M intangible impairment overshadowed otherwise solid non-GAAP results .
  • PS revenue declined 20.4% YoY to $19.7M, pressured by delayed closures of large deals and lower attach; some PS resources were dedicated to unbilled or reduced-rate client success work to drive renewals .
  • FY25 revenue ranges were narrowed/lowered at the mid-point on USD strength and PS softness; Q4 FX headwind ~$0.8M to subscription revenue versus the prior outlook and ~$1.1M additional FX headwind to FY25 subscription revenue versus last quarter’s guidance .

Financial Results

MetricQ1 FY25Q2 FY25Q3 FY25
Total GAAP Revenue ($M)$151.2 $152.2 $151.7
YoY change (%)-5.6% -4.0% -3.7%
GAAP Subscription Revenue ($M)$131.4 $131.6 $132.0
YoY change (%)-2.6% -2.3% -0.6%
GAAP PS & Other Revenue ($M)$19.8 $20.6 $19.7
YoY change (%)-21.6% -13.1% -20.4%
GAAP Gross Margin (%)48.1% 49.0% 49.9%
Non-GAAP Gross Margin (%)67.8% 69.0% 68.8%
Adjusted EBITDA ($M)$50.7 $54.9 $53.6
Adjusted EBITDA Margin (%)33.6% 36.1% 35.3%
GAAP Net Loss ($M)$(42.8) $(32.9) $(381.6)
GAAP Diluted EPS ($)$(0.13) $(0.10) $(1.12)
Adjusted EPS ($)$0.04 $0.05 $0.05

Segment mix

Segment MixQ1 FY25Q2 FY25Q3 FY25
Subscription Share of Total (%)86.9% 86.5% 87.0%
Subscription ($M)$131.4 $131.6 $132.0
PS & Other ($M)$19.8 $20.6 $19.7

Key KPIs and Cash

KPIQ1 FY25Q2 FY25Q3 FY25
Adjusted Operating Cash Flow ($M)$39.1 $(5.5) $21.1
Adjusted Free Cash Flow ($M)$33.0 $(11.6) $14.9
Cash & Cash Equivalents ($M)$160.2 $142.2 $151.2

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
GAAP Subscription RevenueFY 2025$526–$532M $526–$529M Narrowed; lowered at mid-point mainly due to USD strength
Total GAAP RevenueFY 2025$607–$617M $607–$611M Narrowed/lowered
Non-GAAP Gross Profit MarginFY 202568–70% 68–70% Maintained
Adjusted EBITDAFY 2025Low end of $215–$225M (~35%) ~$215M (~35%) Maintained at low end
GAAP Subscription RevenueQ4 FY 2025—$131–$134M New Q4 guide; includes ~$0.8M FX headwind vs prior outlook

Additional context: CFO noted incremental FX headwinds (~$1.1M to FY25 subscription) relative to prior quarter’s update and expects year-end FY25 net leverage around 4.1x .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Retention/churnQ1: “peak churn” in Q1; account-by-account renewal process; step-downs expected through FY25; ahead of internal ARR retention targets . Q2: bookings and churn improved sequentially YoY; pace slower than hoped .Q3: retention “positive and consistent with internal targets”; “past peak churn,” stabilization toward benchmarks .Improving
AI/productQ2: universal forecasting in Connected Planning; risk monitor; logistics enhancements; AI in Global Trade .Q3: embedding traditional/gen AI across apps; logistics tendering; global trade document processing and compliance screening .Expanding practical AI
System integrators (SIs)Q2: partner-led transformations; joint pursuits in strategic accounts .Q3: deeper engagement with major SIs; targeted joint initiatives across industry groups; proactive executive dialogues .Deepening GTM via SIs
Mid-market focusQ2: mixed historical performance; building strategy and capacity .Q3: new mid-market leader; stabilize long-tail retention; targeted product campaigns (global trade, logistics) .Early build-out
Tariffs/macroQ2: port closures underscored need for agility .Q3: rising client interest amid anticipated U.S. trade policy shifts; preparation for compliance and landed cost impacts .Increasing client urgency
Logistics/TMS demandQ2: logistics-led wins (TMS + parcel) .Q3: trucking market bottoming; demand for optimization; pipeline positively impacted .Improving
Professional servicesQ1: unbilled investments to drive client success and renewals; PS revenue/margin pressured . Q2: PS below expectations on delayed large deals and backlog execution .Q3: PS down 20% YoY; some resources at unbilled/reduced rates for renewals .Pressured near-term
Strategic reviewQ1: ongoing . Q2: ongoing .Q3: ongoing; no Q&A on review .Ongoing

Management Commentary

  • “I remain confident that we are past peak churn … and that gross retention has stabilized and is moving up towards industry benchmarks.” — Andrew Appel, CEO .
  • “We are embedding AI … to help shippers make better tendering decisions … and [for] global trade … unstructured processing of global trade documents … automated goods classification and more accurate compliance screening.” — Andrew Appel, CEO .
  • “Our third quarter adjusted EBITDA was $53.6 million, a 35.3% margin … reflects our ongoing commitment to operational efficiency.” — Marje Armstrong, CFO .
  • “We are modestly narrowing our full year subscription revenue guidance mainly due to U.S. dollar strengthening, while maintaining full year adjusted EBITDA guidance.” — Marje Armstrong, CFO .
  • “The strategic review … is still ongoing.” — Andrew Appel, CEO .

Q&A Highlights

  • Billings/deferred revenue: Subscription billings up ~8% YoY and deferred revenue up ~6% YoY in Q3; CFO attributed it mainly to renewal timing and noted normalization in Q4 .
  • Growth engines: Cross-sell showing significant momentum; new logo wins in North America; SI channel progress with targeted joint initiatives and executive-level engagement .
  • Mid-market plan: Stabilize “long-tail” retention; targeted sales capacity for global trade and logistics to drive higher-velocity, lower-ASP transactions .
  • Tariffs/policy: Clients preparing for a volatile trade environment; E2open’s global trade coverage (230 countries) supports compliance, landed cost predictability, and PS opportunities .
  • Sales cycles/slips: Large transformational deals remain elongated but not worsening; slip deals generally close at rates well above average conversion .
  • Logistics demand: Signs of trucking bottoming; seeing growth in volume-metric businesses and larger wins combining TMS, parcel, visibility, and services .

Estimates Context

  • Wall Street consensus (S&P Global) for ETWO was unavailable; a beat/miss analysis versus consensus cannot be provided. Comparisons are made versus company guidance and reported results instead [GetEstimates error].
  • Q3 subscription revenue was above the mid-point of Q3 guidance ($130–$133M), with Adjusted EBITDA and cash flow remaining strong, while GAAP results were impacted by non-cash impairment charges .

Key Takeaways for Investors

  • Subscription stabilization is taking hold; improved retention and bookings should support a revenue inflection as FY25 progresses and into FY26, even as large-deal cycles remain elongated .
  • Near-term PS revenue headwinds are driven by mix and timing; management expects PS to improve as delayed deals close and backlog execution normalizes .
  • Guidance was prudently narrowed on FX; Adjusted EBITDA and non-GAAP gross margin ranges were maintained, underscoring disciplined cost control and cash generation .
  • Product and AI roadmap remains a differentiator across planning, global trade, and logistics; IDC recognition reinforces E2open’s competitive position in supply chain planning .
  • SI partnerships and a renewed mid-market motion broaden go-to-market leverage; watch for joint transformation wins and increased volume velocity in targeted products .
  • Logistics exposures may benefit from a trucking recovery; combined TMS/parcel/visibility solutions are resonating with large enterprises seeking optimization .
  • The strategic review continues; alongside retention success and an expanding pipeline, it remains a narrative element for the stock into FY26 .